The South African rand lost a bit of ground in early trading on Thursday, May 8, as traders waited for the country’s latest manufacturing output figures. According to market data, the rand was trading at R18.31 to the U.S. dollar by 07:18 GMT, down about 0.2% compared to Wednesday’s closing rate.
The soft start for the currency came just hours before Statistics South Africa was due to release its March manufacturing data . Many local and international investors are watching this release closely, as it is expected to show a turnaround for the sector after several months of poor performance.
Economists surveyed believe the manufacturing sector likely recorded year-on-year growth in March. This would mark a reversal from the previous four months, where the industry suffered contractions. A research note from Nedbank pointed to a key reason behind this potential improvement: fewer power cuts and less disruption at South African ports. Both electricity shortages and port delays have been major bottlenecks for the economy, especially for companies trying to produce and export goods efficiently.
While these signs of recovery offer hope for the local economy, the rand’s movement is still highly tied to international market trends. Analysts say the currency is sensitive to global risk appetite and is likely to be affected by changes in the strength of the U.S. dollar. This week, attention is turning to upcoming U.S.-China trade talks scheduled for the weekend. Investors around the world are waiting to see if the talks will ease global trade tensions, which could influence emerging market currencies like the rand.
On the reserves front, the South African Reserve Bank reported early Thursday that the country’s net foreign reserves rose to $64.318 billion at the end of April, up from $63.167 billion in March. A stronger reserve position usually strengthens confidence in the country’s financial stability and its ability to support the rand during times of volatility.
In the bond market, South Africa’s benchmark 2030 government bond also weakened slightly during early morning deals. Its yield rose by 2 basis points to 8.905%, indicating a minor uptick in the cost of government borrowing.
Traders say the next few days will be crucial, with both local data and global developments likely to shape investor mood. For now, the rand’s direction seems to be hanging in the balance—waiting for clear signals from both the domestic economy and the broader world stage.
