World Markets

South Africa's rand pauses recent slide as investors await next trigger event

Credit: REUTERS/MIKE HUTCHINGS

South Africa's rand firmed early on Tuesday, pulling back from an 11-month low as long dollar investors took some profits and awaited further clues on the outlook for the global and local economy.

JOHANNESBURG, Aug 20 (Reuters) - South Africa's rand firmed early on Tuesday, pulling back from an 11-month low as long dollar investors took some profits and awaited further clues on the outlook for the global and local economy.

At 0650 GMT the rand ZAR=D3 was 0.32% stronger at 15.4200 per dollar compared to an overnight close 15.4700.

The rand has lost close to 10% since Aug. 1, battered by local and global issues, breaking through a succession of technical milestones on its way to 15.50, a key pivot-point last reached in September 2018 that would trigger stop-losses held by importers and open the path to a deeper retreat.

But on Tuesday the currency's slide paused, with a lean data calendar, low liquidity, and fresh hopes that a world recession will not materialise drawing some buyers at current levels.

Fears of a recession were soothed by the prospect of Germany ditching its balanced budget rule to boost spending and China mulling more economic support measures.

South Africa's statistics agency publishes July inflation figures on Wednesday, and while tame price growth this year saw the central bank cut lending rates last month, the recent bout of currency volatility may reignite bets that the cutting cycle will be short-lived.

Bonds opened on a steady footing ahead of an auction of long-term government paper at 0930 GMT, with the yield on the benchmark 10-year issue ZAR=D3 adding 0.5 basis points to 8.44%.

In equities, bullion producer Harmony Gold HARJ.J reported a 19% rise in annual profit on higher output and cash flow, while headline earnings per share (HEPS) for the financial year ended June 30 was 2.04 rand per share.

(Reporting by Mfuneko Toyana; editing by John Stonestreet)

((mfuneko.toyana@thomsonreuters.com; +27117753153; Reuters Messaging: mfuneko.toyana.thomsonreuters.com@reuters.net))

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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