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South Africa's rand hits 1-week low as firm dollar weighs

Kitco News

JOHANNESBURG, Feb 8 (Reuters) - South Africa's rand weakened on Friday, as the currency along with other emerging markets were pressured by a stronger dollar.


At 0640 GMT, the rand was 0.39 percent weaker at 13.6600 per dollar, its weakest since Jan. 29, compared with an overnight close of 13.6250 in New York.


Since last Thursday's rally to a two-and-a-half-year peak, the rand has backtracked more than 3 percent in the face of a resurgent dollar , which was hovering near a two-week high on Friday.


The greenback has benefited from flagging global risk appetite, soured by investors' uncertainty over U.S.-China trade negotiations, slowing global growth, and Britain's chaotic exit from the European Union due next month.


With these factors playing in the background, investors sought safe-haven assets as the rand tumbled this week through successive technical support levels, first at 13.30 and then 21-day moving average at 13.64 in the previous session.


President Cyril Ramaphosa's State of the Nation speech late Thursday, where he promised to split struggling state power giant Eskom into three separate entities, failed to halt the rand's slide. "The rand's ability to hold on to gains will likely be tested over the coming month. Investor sentiment is likely to face crossroads," said currency analysts at Nedbank Mehul Daya and Walter de Wet in a note.


The budget speech scheduled for Feb. 20 is the next major test for the currency, followed by national elections on May 8, with volatility expected to rise as investors maintain a bearish stance.


Bonds weakened, with the yield on benchmark government paper due in 2026 adding 2.5 basis points to 8.68 percent.


Stocks were set to open lower at 0700 GMT, with the JSE securities exchange's Top-40 futures index down 0.19 percent.


(Reporting by Mfuneko Toyana, Editing by Sherry Jacob-Phillips)

Messaging: mfuneko.toyana.thomsonreuters.com@reuters.net))
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