Demand for dollars has driven the rand above R17.00, and it didn’t stop there in trade on Monday morning (3 August), with the Absa Purchasing Managers’ Index highlighting worrying features around production and employment in South Africa. The rand touched its weakest level in over three weeks at R17.09 on Friday, as risk aversion grew driven by pessimism over a quick recovery in the US and global economies.
Rebound in the dollar late last week saw the rand give up significant ground, as markets continue to dwell on uncertainty regarding trade tensions, US elections and recovery, as well as rising virus numbers. Data from Absa Purchasing Managers’ Index (PMI) for July, showed a slight decline compared to the previous month but continued to signal a further month-on-month improvement for conditions in the manufacturing sector. The PMI declined to 51.2 index points in July from 53.9 in June, staying above the neutral 50-point mark for a third consecutive month.
Gold hit another record high in early Asian trade on Monday morning, touching $1,984 before settling back to $1,976. Gold’s safe-haven status along with falling US Treasury yields and a soft dollar could still see the yellow metal hit the $2,000 mark in the short term. Nedbank said in a note that the rand could trade in a broad range of between R16.80, and R17.35.