Picture: REUTERS
Picture: REUTERS

The rand gained further ground against the dollar on Thursday afternoon on upbeat local manufacturing data and subdued consumer inflation numbers for September out of the US.

The rand gains are linked to improved economic prospects under new finance minister Tito Mboweni and a possible pause by the US Federal Reserve in hiking rates further after the International Monetary Fund (IMF) downgraded expected global GDP growth for 2018 and 2019.

US inflation rose 2.3% in September from 2.7% in August and 2.9% in July.

A second month of falling inflation will strengthen market concerns that the Fed is set to continue with interest-rate hikes in an environment of low inflation, which could ultimately affect economic growth negatively.

Core inflation in the US, the Fed's preferred measure of price pressures in the economy, was unchanged at 2.2%.

The euro gained on the dollar after the release of the data, hitting $1.1592 from $1.1517.

Locally, manufacturing production data came in slightly more positive than expected, rising 1.3% in August (from a predicted 1.2%), and 2.8% in the previous month.

At 2.53pm the rand was at R14.5578 to the dollar from R14.7873, at R16.8674 to the euro from R17.031 and at R19.2704 to the pound from R19.4911.

The euro was at $1.1587 from $1.1517.

Despite the improvement on the day, the rand remains vulnerable.

FXTM analyst Hussein Sayed said the explosive volatility across global markets risks upgrading the threat of further volatility in the rand.

"Investors could potentially decide against carrying high-yielding assets in a time of high market volatility," he said.

Local bonds yields were higher despite US bond yields falling. The R186 was last bid at 9.28% from 9.22%.

The rise in US bond yields momentarily halted on Thursday as investors piled into safe-havens to shelter from the turbulence in equity markets. 

The yield on the 10-year treasury note declined to 3.158% from 3.221% after US President Donald Trump said the Fed "had gone crazy" and that he was "not happy" with the Fed's plans to raise rates further.

The 10-year was last seen at 3.1654% from 3.1673%.