JOHANNESBURG: The South African rand recuperated some losses in early trade on Friday, ahead of a key US payrolls data and after slumping on Thursday as tensions escalated in the Middle East.
By 0730 GMT, the rand traded about 0.5% firmer at 17.4275 against the dollar.
Since the start of the week, however, the local unit was down nearly 2%.
“The ZAR had a tough week, largely driven by a USD resurgence fuelled by better-than-expected US labour data and rising geopolitical risks,” said Andre Cilliers, currency strategist at TreasuryONE.
The dollar hovered near a six-week high ahead of a payrolls report that could give hints on the path of interest rate cuts in the world’s biggest economy.
The greenback was also supported by demand for safe-haven assets after an Iranian missile attack on Israel on Tuesday left investors assessing widening Middle East tensions and their impact on the global economy.
Like other risk-sensitive currencies, the rand often takes direction from global drivers in the absence of major local factors.
The local unit has gained more than 4.5% against the greenback over the last three months.
South African rand seesaws against buoyant dollar
“The ZAR’s correction was overdue after a period of significant appreciation, and the nonfarm payroll data today will play a key role in determining its next move,” Cilliers added.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index was about 0.6% up in early trade.
South Africa’s benchmark 2030 government bond was slightly softer in early deals, with the yield up 3.5 basis points to 9.19%.
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