Johannesburg, Jan 9 – The South African rand was little changed in early trade on Friday, as investors remained cautious ahead of key US labour market data that could influence the Federal Reserve’s interest rate outlook.
At 0719 GMT, the rand traded at 16.54 to the dollar, broadly steady compared with its previous close of 16.5225.
Market participants are closely watching the upcoming US non-farm payrolls report, which is expected to show job growth slowing to 45,000 from 64,000, with the unemployment rate forecast at 4.6%.
“On the non-farm payroll, it is forecasted to be lower, but I don’t think the numbers will give firm direction,” said Adam Phillips, treasury specialist at Umkhulu Treasury, adding that the data may point to gradual stabilisation following the US government shutdown.
The rand has performed strongly this week, rallying to a near three-year high as sentiment towards South Africa improved. The Johannesburg Stock Exchange reached record levels, while local bond yields remained subdued.
“The rand is consolidating around the R16.50 level after the last two days’ correction from near three-year highs,” said Andre Cilliers, currency strategist at TreasuryONE. He added that there is market talk suggesting the South African Reserve Bank may have absorbed recent dollar inflows to bolster its foreign reserves.
Data released by the central bank on Thursday showed South Africa’s net foreign reserves increased to $71.14 billion at the end of December, up from $70.02 billion in November.
In the bond market, South Africa’s benchmark 2035 government bond softened in early trade, with the yield rising 5 basis points to 8.375%.