Rand extends losses against dollar, bonds weaker

Wage demands also likely to pressure the local currency.

South Africa’s rand extended losses against the dollar early on Monday after a statement by US Federal Reserve Chair Janet Yellen on Friday signalled the bank was on course to raise interest rates later this year, stoking greenback buying.

By 06:45 GMT the rand had softened 0.28% to a week-low of 12.0690 per dollar, remaining above the crucial technical level that is likely to see the unit weaken further towards 2002 lows of 12.6500.

The rand flirted with three-week highs in the previous week before capitulating to a firming dollar, as inflation pressures increased with local petrol prices set to rise 14% on Wednesday.

A wage dispute between South African public sector unions demanding a 10% wage hike, against an offer of 5.8%, is also likely to pressure the unit.

“The fact that government hasn’t made any tangible progress on this matter remains a concerning overarching factor for the rand,” said economists at ETM Analytics in market note.

Government bonds were also weaker, with the benchmark issue due in 2026 adding 5 basis points to a week-high of 7.88 percent.

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