Johannesburg - South Africa's rand on Monday opened the new month weaker against the dollar, extending steep losses triggered by poor trade numbers in the previous week, as a weekend rate cut by China's central bank kept up the pressure on the local currency.
By 06h15 GMT the rand had softened 0.15 percent to 11.6725 per dollar, with the negative moment fuelled by a yawning trade deficit revealed by data on Friday likely to keep the currency on the backfoot against a bullish greenback.
“The rand and local bonds remain under pressure from a rising dollar and poor local data,” said John Cairns, a trader at Rand Merchant Bank, in a market note.
“January's 24-billion-rand local trade deficit is the worst on record and, while the poor performance is partly seasonal, it is worrying that exports dropped so sharply,” he added.
China cut deposit and lending rates on Saturday as the world's number two economy stepped up efforts to combat deflation and slowing growth, pushing the dollar index to 11-year highs as bets of a rate hike by the US Federal Reserve by mid-year gained traction.
Government bonds were mostly flat, with the benchmark instrument due in 2026 unmoved, at 7.64 percent.
With the domestic data calendar light on Monday and for most of the week, attention will be on offshore data releases, beginning with European PMI numbers on Monday, while Friday will bring the closely watched US non-farm payrolls figures.
Reuters