JOHANNESBURG (Reuters) –Â South Africa’s rand was on shaky ground against the dollar on Wednesday after pushing convincingly through the 10.80 barrier overnight, with scope for more losses if the current account deficit for the first quarter widens as much as expected.
Investors are downbeat about Africa’s most developed economy, which is trying to avoid its second recession in five years as output from the key manufacturing and mining sectors stutters, weighed down by a five-month platinum strike.
The local unit fell to a session low of 10.8640 per dollar, the weakest it has been since March 24, and was trading at 10.8340 by 0645 GMT, not far off Tuesday’s New York close.
“The rand faces continued risks from the local CPI and current account figures this morning and then the U.S. Fed meeting tonight,” Rand Merchant Bank currency analyst John Cairns said.
Economists polled by Reuters expect the Reserve Bank’s quarterly bulletin due out at 0800 to show the current account deficit widened to 6.1 percent of GDP in the first quarter from 5.1 percent.
Consumer inflation and retail sales data to be released at 0800 GMT and 1100 GMT respectively are also likely to show the economy remains in a dire state.
The market was largely underwhelmed by President Jacob Zuma’s speech to parliament on Tuesday night, with investors looking for concrete government action to back a pledge to lift annual growth to 5 percent by 2019.
“We heard nothing that should inspire the rand, despite its correct focus on the economy,” Cairns said.
Government bonds weakened, with yields for the benchmark 2026 and 2015 paper adding 4 basis points to 8.48 percent and 3.5 basis points to 6.76 percent respectively.
