South Africa’s rand weakened early on Tuesday with the currency continuing to struggle to break through recent highs as some of the cheer over the appointment of Cyril Ramaphosa as head of the ruling party gave way to more bearish sentiment.
At 0640 GMT the rand had weakened 0.16 percent to 12.4000 per dollar compared to a close of 12.3800 overnight in New York., Reuters reports
Over the last few sessions the currency has failed to breach technical resistance around 12.30, which could open the door to rally towards 12.23 and lower – the rand 2-1/2 year best touched in December after Ramaphosa’s election and again last Thursday.
The rand has been on the front foot since December, gaining around 8 percent as investors bet Ramaphosa’s election as leader of the ruling African National Congress would push through business-friendly policies.
Momentum and trend indicators have however shown the rand in overbought territory and due for a retracement, with the added threat of higher rates in the United States pouring further water on bullish bets.
With South Africa’s economy also struggling to gain traction following a recession in the first quarter of 2017, investors may also be looking to other emerging market currencies for bookable carry trades.
Bonds traded slightly weaker, with yield on the benchmark paper due in 2026 up 0.5 basis points at 8.605 percent.
Stocks opened slightly higher, with the benchmark Top-40 index up 0.18 percent to 53,227 points.