The South African rand strengthened slightly against the US dollar on Friday, supported by rising gold prices as investors awaited key US employment data for signals on the Federal Reserve’s future interest-rate direction.
By 0703 GMT, the rand was trading at 16.34 per dollar, gaining about 0.2 per cent from its previous close.
Gold, one of South Africa’s major exports, strengthened and was on course for its biggest weekly gain since January, supported by weaker oil prices and declining inflation concerns following hopes of a peace deal in the Middle East.
The US dollar remained largely unchanged against a basket of major currencies as traders waited for the release of non-farm payrolls data later on Friday.
Economists surveyed expect the US economy to have added 80,000 jobs, while the unemployment rate is projected to remain steady at 4.2 per cent.
“With today’s payrolls report and the long weekend ahead, traders are expected to remain cautious, with many preferring to maintain long US dollar positions until there is greater clarity on the Fed’s policy outlook,” said Andre Cilliers, currency strategist at TreasuryONE.
On the domestic front, South Africa’s net foreign reserves increased to $71.76bn at the end of July, up from $71.34bn in June, according to central bank data.
Investors focused on South Africa’s economic outlook will next week turn attention to manufacturing and second-quarter employment figures on Tuesday, followed by mining data on Thursday.
The reports are expected to provide further insight into the performance of Africa’s most industrialised economy.
Meanwhile, trading on the Johannesburg Stock Exchange opened positively, with the Top-40 index rising by 0.7 per cent.
However, South Africa’s benchmark 2035 government bond weakened in early trading, with its yield rising by four basis points to 8.43 per cent.
