The rand eased slightly on Monday and remained within a tight recent trading range ahead of GDP data in the next session, while concerns over the euro zone economies kept pressure on the local unit.
The rand softened by 0.11% to R10.7070/$ by 14:46 GMT. Trade volumes were low due to a bank holiday in the UK with rand watchers awaiting the release of South Africa’s second-quarter GDP figure on Tuesday.
“From tomorrow it should start kicking-off a little bit,” said Ian Martin, a trader at Rand Merchant Bank.
Martin said the rand would likely remain range-bound between 10.50 and 10.80 to the dollar for most of the week unless GDP numbers delivered a “big surprise”.
“The rand has done quite well compared to other emerging markets but it’s not enough to take it out of this recent range,” he added.
Following a 0.6% contraction in the previous quarter, a Reuters poll predicted Africa’s most developed economy grew by 0.9% in the second, narrowly avoiding a recession.
Remarks by the ECB’s Mario Draghi last week made quantitative easing more likely as the eurozone, South Africa’s biggest trading partner, struggles with low inflation that has hampered economic activity.
Draghi said last week the central bank would respond with all its “available” tools to prevent further drops in inflation.
The European Union is South Africa’s largest trading partner, and a drop in consumer demand and economic activity could negatively affect local exporters.
Government bonds also weakened, with yields on the 2015 paper up 3 basis points to 6.565%, while the yield on the paper due in 2026 ticked-up 1.5 basis points to 8.215%.
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