JOHANNESBURG, April 30 (Reuters) – The rand weakened early on Thursday after rating’s agency Fitch cautioned South Africa over its reliance on offshore portfolio inflows, with the currency facing further data-related risks later in the session.
“South Africa has had persistent high twin budget and current account deficits alongside low growth,” Fitch said in a statement on emerging economies.
“Reliance on portfolio inflows exposes the external accounts to changes in investor sentiment.”
At 0650 GMT, the rand softened 0.25 percent to 11.8150 per dollar, pulling back from a rally on Wednesday that saw the unit come just shy of a two-month high.
The rand failed to hold to Wednesday’s momentum after weak U.S GDP figures and the Federal Reserve’s acknowledgement of soft patches in the economy pushed investor bets of a rate hike in the U.S back to September.
The rand could get direction from producer inflation, government budget and trade data, all due on Thursday.
“The headline events globally are the Eurozone inflation and unemployment data … Trade could impinge on the rand if we get another negative surprise,’ said John Cairns, a currency trader at RMB.
Government bonds were weaker, with the benchmark issue due in 2026 adding 2 basis points to 7.95 percent. (Reporting by Mfuneko Toyana; Editing by Joe Brock)
