JOHANNESBURG (Reuters) – South Africa’s rand pulled back from the previous day’s one week lows against the dollar on Friday but was not of the woods as investors braced for a likely deterioration in economic growth and budget deficit forecasts next week.
With no domestic data to direct the market during the session, the market would look to U.S. housing data and comments from Federal Reserve chair Janet Yellen for pointers on the timing of rate hikes, traders and analysts said.
The rand has weakened sharply against the dollar in recent weeks as investors dumped emerging market assets on expectations U.S. rates will rise faster than expected.
The rand was trading at 11.1150 versus the greenback at 0648 GMT, almost exactly where it ended Thursday’s New York session.
In fixed income, government bonds were also off to a sluggish start, with the secondary market benchmark due in 2026 quoted flat at 8.1 percent.
Charts suggest the rand would struggle to strengthen beyond 11.04, while the 11.1650 level would offer support for the currency.
“I think the rand will more than likely settle down a little more today,” Standard Bank trader Warrick Butler said.
“The risk still remains for a weaker rand given the markets’ clear nervousness but I can’t imagine we break above 11.20.”
