The South African rand strengthened in early trading on Monday ahead of the release of manufacturing purchasing managers’ index (PMI) and vehicle sales data for July, as investors assessed the outlook for Africa’s most industrialised economy.
The rand traded at 16.4650 against the U.S. dollar as of 0502 GMT, gaining 0.6% from its previous close.
Market participants are awaiting the release of the Absa PMI survey, scheduled for 0900 GMT, which is expected to provide fresh insight into manufacturing activity and business conditions in South Africa.
Manufacturing sentiment weakened in June as declining demand affected new orders. However, lower oil prices supported expectations for improved business conditions in the months ahead.
Investors are also monitoring July vehicle sales figures, due at around 1200 GMT, as the data is expected to provide an indication of consumer demand for major purchases.
Vehicle sales increased by 15.3% in June, but economists expect growth to slow in July due to a higher comparison base from the previous year and a less supportive economic environment.
Nedbank economists projected vehicle sales growth would moderate to 9.2% in July, while still describing expected sales levels as resilient.
“Even so, sales are expected to remain robust at 56,247 units, underpinned by the lagged effects of interest rate cuts and the availability of affordable imported models,” the economists said in a note.
Meanwhile, South Africa’s benchmark 2035 government bond weakened in early trading, with the yield rising 2.5 basis points to 8.605%.
Investors are expected to continue tracking economic data releases and monetary policy signals for further direction on the rand and local financial markets.
