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South Africa's rand falls on caution over U.S. coronavirus aid

Credit: REUTERS/THOMAS WHITE

The South African rand weakened against the dollar in early trade on Tuesday as broader risk sentiment was curbed by caution ahead of a deadline to reach an agreement for a U.S. coronavirus stimulus package.

JOHANNESBURG, Oct 20 (Reuters) - The South African rand weakened against the dollar in early trade on Tuesday as broader risk sentiment was curbed by caution ahead of a deadline to reach an agreement for a U.S. coronavirus stimulus package.

At 0615 GMT, the rand ZAR=D3 traded at 16.5675 versus the U.S. dollar, 0.29% weaker than its previous close.

"The environment remains unchanged and we continue to wait for the dynamics in the United States to play out," said Bianca Botes, executive director at Peregrine Treasury Solutions in Pretoria.

The rand's advance in the recent weeks — against a backdrop of a weak local economy — has mainly been driven by offshore sentiment, particularly the outlook for further monetary and fiscal stimulus from the world's major economies.

U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin "continued to narrow their differences" in a telephone conversation on Monday, her spokesman Drew Hammill said.

Pelosi hopes that by the end of Tuesday there will be "clarity" on whether a coronavirus stimulus bill can be passed before the Nov. 3 presidential election, he said.

With no data releases locally this week, the focus remains on Finance Minister Tito Mboweni's medium-term budget policy statement next week — with markets looking for details on how a massive public works and job-creation drive in response to the coronavirus crisis will be funded.

In fixed income, the yield on the benchmark government bond due in 2030 ZAR2030= was up 1.5 basis points to 9.295%, reflecting weaker prices.

(Reporting by Olivia Kumwenda-Mtambo; editing by Uttaresh.V)

((Olivia.Kumwenda@thomsonreuters.com; +27 10 346 1084;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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