Rand hits two-month low as manufacturing PMI drops
The local currency is in its fifth consecutive session of losses
The rand had fallen more than 1% in intra-day trade on Tuesday afternoon, reaching its lowest level in two months, after the Absa manufacturing purchasing managers’ index (PMI) came in lower than expected.
The local currency is in its fifth consecutive session of losses, its first five-session loss since early August, as emerging-market currencies remaind under pressure amid global risk-off trade.
The Absa PMI fell to 41.6 points in September, from 45.7 previously. The latest figure is far below analyst expectations of an increase to 46.5 points, according to a Bloomberg consensus.
“This has been the second consecutive decline in factory activity and highlights how external and domestic risks are negatively impacting the nation’s manufacturing sector,” FXTM research senior research analyst Lukman Otunuga said.
“While the data releases are significant and have the potential to impact expectations around the SA Reserve Bank cutting interest rates, the rand is likely to be moved by external drivers. Signs of easing tension between the US and China over trade should lend some support to the rand,” Otunuga said.
At 3.20pm, the rand had weakened 0.99% to R15.297/$, after earlier reaching a two-month low of R15.33/$. It had fallen 0.99% to R16.6713/€ and 0.48% to R18.7161/£. The euro was flat at $1.0899. The dollar reached a 29-month high against the euro on Tuesday, following disappointing eurozone manufacturing data.
Gold lost 0.39% to $1,466.59/oz and platinum 0.21% to $880.44. Brent crude added 1.04% to $60 a barrel.