Johannesburg - South Africa's rand weakened against the dollar in early trade on Tuesday ahead of Thursday's Federal Reserve interest rate announcement, but the currency could get a boost from domestic current account data.
Government bonds mirrored the rand, with government debt due in 2026 shedding 2.5 basis points to 8.485 percent, while the blue-chip Top-40 futures index ticked down 0.23 percent, pointing to the local bourse opening 101 points lower.
At 06h43 GMT the rand was 0.41 percent softer at 13.5400 to the dollar compared with Monday's New York close of 13.4850.
“Range for the day will depend on what the current account looks like,” said Warrick Butler, a currency trader at Standard Bank, in a note.
“Initially I think 13.45-13.55 should contain the rand but if we get a really good surprise then we could trigger stops below the support level and with a little bit of momentum it could reach 13.30.”
South Africa's Reserve Bank will shed some light on the current account which, according to analysts, could support further narrowing of the deficit, expected to be 3.7 percent of GDP. The bank releases its quarterly bulletin with current account and spending data for the second quarter at 08h00 GMT.
The current account shortfall was smaller at 4.8 percent of GDP in the first quarter compared with 5.1 percent in the last three months of 2014, as a narrower deficit on the services, income and current transfer account offset a wider trade gap.
“Remember that the large deficit is the major underlying cause of rand weakness. It has also certainly been one of the major factors generating sell recommendations on the rand,” said John Cairns, a currency strategist at Rand Merchant Bank, in a note.
REUTERS