Rand hits R16 vs dollar

The rand broke through R16 against the dollar in morning trade on Thursday (7 January), following a softer-than-expected Purchasing Managers’ Index reading, while global markets reacted to hydrogen bomb testings in North Korea.

Adding to the pressure, the rand also faced a depreciating yuan, Reuters reported.

The dollar advanced following data which showed US private-sector employers added 257,000 jobs in December, with unemployment reaching a 3-year low.

Equally, the rand weakened against the euro and British pound, trading at record lows.

By 08:55 AM, the rand was 1.23% softer against the dollar, at R6.01. Against the euro the rand was at R17.32, and R23.41 against the pound.

Adding to investors’ nervousness was North Korea’s announcement that it had successfully tested a hydrogen bomb, Reuters reported.

Locally, poor market conditions and a lack of demand were the main drivers behind a drop in the latest seasonally adjusted Standard Bank South Africa Purchasing Managers’ Index (PMI) from 49.6 to 49.1, published on Wednesday (6 January).

December data highlighted a continuation of the downturn in South Africa’s private sector that started in June, with business conditions deteriorating at a slightly stronger rate than in November.

“South Africa’s private sector remained in the doldrums in December, thereby continuing the trend that has defined the second half of 2015,” said Markit economist Oliver Kolodseike.

The currency touched R16 against the greenback on 11 December 2015, after president Jacob Zuma replaced Finance Minister Nhlanhla Nene with David van Rooyen, before re-appointing Pravin Gordhan to his old post.

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Rand hits R16 vs dollar