S.Africa's rand softer, global growth woes a drag

JOHANNESBURG (Reuters) - South Africa's rand traded a touch softer against the dollar on Monday and remains vulnerable to dim global economic prospects while retail sales numbers out later in the week will provide the latest clue on the domestic interest rate outlook.

By 0649 GMT the rand was 0.42 percent weaker at 8.1045 to the dollar compared with Friday's New York close at 8.0710.

"The market still seems wary of any negative news out of Europe," Standard Bank trader Warrick Butler said.

"Given the lack of economic data out today and in the absence of any major news we will continue to play the 8.0600-8.1100 narrow range."

The rand has lost nearly 9 percent from this year's highs around 7.40/dollar in February, battered by risk aversion as investors worry that debt problems affecting the euro zone could spread.

Government bonds were largely steady in early Monday trade, with the yields on the three-year and 14-year benchmarks each dipping just half a basis point to 5.63 percent and 7.405 percent respectively.

Lingering uncertainties over the euro zone crisis and the weak global growth outlook should keep rand bulls at bay, with 8.05 proving a hard level to breach, Absa Capital said in a note.

"This morning's Japanese GDP data indicate the global economic recovery remains extremely fragile, which could restrict further risk appetite, unless the market believes (this) will actually prompt the authorities to inject further stimulus," it said.

While the local market should largely follow global trends this week, South African retail sales data out on Wednesday could rekindle expectations of a domestic rate cut if it the data comes in worse than expected, weighing on the rand and pushing bond yields lower.

Source: http://news.yahoo.com/africas-rand-softer-global-growth-woes-drag-071448615--finance.html

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