South Africa’s rand firmed on Monday, clawing back part of the heavy losses recorded in the previous trading session, as investors reassessed movements in global commodity prices and emerging market currencies.
By 1443 GMT, the rand was trading at 16.0275 against the U.S. dollar, marking an appreciation of about 0.8 per cent from Friday’s close. The local unit had tumbled roughly 2.6 per cent at the end of last week amid broad-based pressure on risk-sensitive and commodity-linked currencies.
Market analysts linked the rand’s recent movements to fluctuations in precious metal prices. Roy Topol, portfolio manager at Cratos Asset Management, noted that the currency was currently moving in close correlation with trends in the precious metals market.
Similarly, Shaun Murison, senior market analyst at Rand Swiss, said the rand was likely to continue drawing direction from price movements in key export commodities such as gold and platinum, which remain critical to South Africa’s trade performance.
On the domestic front, fresh economic data painted a mixed picture. A survey released on Monday showed that South African manufacturing sentiment improved in January, supported by increased business activity. However, subdued export demand continued to weigh on the headline Purchasing Managers’ Index (PMI).
In the automotive sector, data from the National Association of Automobile Manufacturers of South Africa (NAAMSA) revealed that new vehicle sales rose 7.5 per cent year-on-year in January. While the figure signaled continued recovery in consumer demand, it fell short of the 14.6 per cent growth forecast by Nedbank economists and was slower than the 19.2 per cent surge recorded in December.
Meanwhile, the Johannesburg Stock Exchange remained under pressure. The benchmark Top-40 index slipped 0.8 per cent, extending losses from Friday’s sharp decline of more than 4 per cent.
South Africa’s bond market also reflected cautious sentiment, with the yield on the benchmark 2035 government bond edging up by one basis point to 8.045 per cent, indicating softer prices.
