Rand snaps losses as risk aversion abates

Manufacturing sector remained under pressure in May, shrinking 1.4% year-on-year.

South Africa’s rand snapped four straight days of losses against the dollar on Thursday, shrugging off weak domestic data as global investors focussed on euro zone efforts to resolve Greece’s debt problems.

South Africa’s manufacturing sector remained under pressure in May, shrinking 1.4% year-on-year after a 2.1% contraction in April.

But the rand climbed as much as 1% to a session high of 12.4440/dollar, and was up 0.37% on the day at 12.5250 by 1621 GMT.

Government bonds took their cue from the rand and the yield for the benchmark due in 2026 ended 8 basis points lower at 8.18%.

The rand hit 4-week lows against the dollar after Greece’s vote to reject a rescue package prompted a flight from risk.

“The whole general risk-off tone has tempered today and we’re certainly quieter, but we’re still going to be very headline-driven going forward,”Rand Merchant Bank trader Jim Bryson said.

“The rand really needs to get through the 12.40 area to take the pressure off … In the meantime, we’ll be bouncing around between the lower 12.40s and the high 12.50s.”

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