RAND SLIPS ON CHINA DATA

THE RAND eased on Friday as weaker-than-expected Chinese factory indicators and firmer economic growth in the US put demand for riskier currencies under pressure.

At 6pm, the rand was 1.38 percent weaker at R14.50 per dollar, adding to the previous session’s losses.

Trading last week was volatile, albeit within a narrow range, with the rand failing to hold below the R14.20 technical resistance mark despite bullplays inspired by the high yield on offer in the face of loose US Federal Reserve policy.

The rand has lost momentum as investors worry about local economic growth and the duration of expansionary fiscal and monetary policies in developed economies that have so far supported flows into the currency and a healthy trade surplus.

China’s manufacturing purchasing managers’ index fell slightly in April as supply bottlenecks and rising costs weighed on production.

Strong US economic growth in the first quarter, with gross domestic product increasing 6.4 percent, took some of the steam out of the rand’s rally, with traders warning that South Africa’s own economic struggles may weigh on its strength.

However, South Africa on Friday posted its largest trade surplus on record for March at R52.77 billion, from a revised R31.22bn in February, driven by higher commodity and mineral exports. Analysts had expected the rand could take another beating in coming days if the trade surplus narrowed more than expected.

Bonds were also weaker with the yield on the benchmark 2030 government issue rising 2.5 basis points to 9.29 percent.

Shares on the JSE edged lower, extending a decline from Thursday evening, as foreign investors continued to take profits. The all share index lost 0.68 percent at 66 937 points and the Top40 index dropped 0.67 percent to 61 096.37 points.