South African rand heads for fourth weekly loss as dollar strengthens and yields rise
JOHANNESBURG, Oct 2 (Reuters) - The South African rand was set for a weekly loss of nearly 2% on Friday, pressured by a stronger dollar and rising global bond yields as investors reduced exposure to riskier assets.
The rand was up 0.2% at 16.6675 against the dollar by 0858 GMT, barely trimming the previous session's losses, as higher US Treasury yields continued to weigh on emerging market assets.
The currency tumbled about 1.5% on Thursday despite supportive domestic data, including lower than expected producer inflation ZAPPIY=ECI, a trade surplus ZATBAL=ECI that exceeded forecasts and a survey showing manufacturing sentiment improved after three months of contraction.
ETM Analytics said higher US bond yields were a headwind for emerging and frontier markets because they tend to draw capital away from riskier assets and pressure local currencies.
The note added that a prolonged bond selloff could trigger a deeper correction in global equity markets.
The rand has weakened for four straight weeks and was on track for its sharpest decline during that stretch while the dollar was set for a third consecutive weekly gain.
Investor focus will be on the US payrolls report due later in the day, with data expected to show that job growth slowed in September.
ETM Analytics said a robust jobs report could calm market nerves and support the rand.
On the Johannesburg Stock Exchange, the Top-40 index .JTOPI was up 0.9% in early trade.
South Africa's benchmark 2035 government bond strengthened slightly, with the yield down 2 basis points at 8.845%.