South Africa’s rand firmed slightly early on Tuesday, pausing after a five-session long steep slide as demand for U.S. dollars eased, and waited for new signals on the pace of a global economic recovery that has stalled in recent days.
At 0645 GMT the rand was 0.35% firmer at 17.1250 per dollar, having tumbled to a one-month low of 17.3400 on Monday as tepid local economic data and surging coronavirus infections around the world saw a rush to safe haven assets.
As local COVID-19 cases breached the 500,000 mark over the weekend, South Africa’s economy continued to show signs of a slower recovery as car sales and factory activity remained subdued.
“Sentiment has improved tentatively with Asian equities mostly in the green while demand for the USD has paused. While this has not yet translated into any ZAR gains, it has halted the local unit’s five-session bear-run,” economists at ETM Analytics said in a note.
Data showing 30 million people were out of work in the United States, added to deadlocked talks on a new coronavirus relief bill, cooled hopes that the world’s no.1 economy could lead a global recovery.
“Investors appear to be waiting for a new catalyst to provide fresh directional impetus after the dollar lost some of its momentum overnight, meaning the market may take on a more reactive approach to the day’s trade.”
Bonds were firmer, with the yield on benchmark 2030 government paper down 6.5 basis points at 9.215%.
In equities, supermarket chain Pick n Pay flagged a more than 50% fall in first-half earnings, weighed down by a ban on sales of alcohol, tobacco and clothes during the lockdown, as well as voluntary severance payments.