S.Africa's rand pulls back; stock market slips
JOHANNESBURG (Reuters) - The rand pulled back on Friday from a week-long rally that drove it to a near three-month high against the dollar this week, and government bonds came under pressure due to emerging market risk aversion stemming from concerns about U.S. debt levels.
Risky assets are being sold in favour of safe haven positions as the U.S. debt situation remains unresolved and the euro zone continues to wallow in the aftermath of a second Greek bailout.
Data from the South African Reserve Bank showed money supply growth slowed slightly in June while demand for credit by the private sector ticked up.
South Africa's annual "strike season" is in full swing, with gold mine workers and producers meeting for wage talks on Friday in a bid to end a strike that could halt output worth up to $25 million a day.
Economists say the strikes are destroying jobs in Africa's biggest economy. The jobless rate stood at 25.7 percent in the second quarter of the year, according to data released on Thursday.
The rand gave up 0.31 percent to 6.7600 to the dollar by 0630 GMT, compared to a New York close of 6.7390.
The currency has bounced from resistance around 6.63, levels last tested in early May.
"Rand bulls ran out of steam for the second day running at the 6.62 mark on the bid chart. This supports our view that the rand strength of this past week, 5.9 percent stronger in seven trading days, is abating," Standard Bank said in a note.
It added the rand would probably not escape the risk aversion "engulfing the market" as the currency was still closely aligned to the performance of risky assets and, unlike some other emerging markets, is not subject to capital controls. Continued...