JOHANNESBURG (Reuters) – South Africa’s rand eased against the dollar early on Tuesday after Central Bank GovernorGill Marcus said the outlook for emerging markets was fragile due to the end of the “era” of abundant capital flows.
The rand was at 10.68 against the dollar at 0649 GMT, 0.4 percent weaker than its New York close.
The unit has underperformed emerging market peers this week, weighed down by concerns about stuttering economic growth stemming from a crippling five-month platinum strike that slashed mining production in the first quarter.
However, Marcus told an accountancy conference in Johannesburg that she expected Africa’s most advanced economy to avoid recession by missing a second consecutive quarter of contraction in the April-June period.
Even if she is right, the constrained growth is likely to worry the two ratings agencies that are due to deliver credit reviews on Friday.
Most analysts are predicting a downgrade, although South Africa is expected to maintain its coveted investment grade rating.
Manufacturing output data due at 1100 GMT will also give a clue as to the health of the key industrial sector.
Wage talks between labour union AMCU and major platinum producers remained deadlocked on Monday. Hopes for an end to the five month strike were dashed after the new mining minister abandoned his mediation role.
Government bonds dipped, with the yield on the benchmark 2026 issue rising 3 basis points to 8.245 percent.
(Reporting by Stella Mapenzauswa; Editing by Ed Cropley and Joe Brock)
