Rand weakens in early trade as strong dollar keeps pressure on

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The rand weakened by 0.5% against the dollar in early trade on Thursday, with analysts saying it will likely remain under pressure throughout the day. 

The local currency opened Thursday morning at 14.65/$ and was changing hands at 14.71/$ at 08:18. 

This after it lost 2% against the greenback on Wednesday due to a combination of a rise in US treasury yields and a strong dollar. 

"The South African currency was under pressure due to broad US dollar strength and news that the World Bank cut South Africa’s economic growth forecast for 2018 to 1% from 1.4% previously," noted NKC African Economics in a morning note to clients. 

The dollar index - which tracks the dollar's relative strength against a basket of currencies - was at 96.01 at 08:31 on Thursday, up 0.26% on the day.

Bianca Botes of Peregrine Treasury Solutions said in a morning note that local factors may also have played a role: "[...] elements such as the questioning of Finance Minister Nhlanhla Nene at the state capture commission of inquiry and, more specifically, his role at the PIC and concerns surrounding the upcoming mid-term budget speech are all weighing in." 

"The rand is expected to remain under pressure today, especially given the flurry of positive US data being released. Factory orders this afternoon should once again contribute to volatility," she added. 

The US will on Thursday announce initial jobless claims for the week ended September 29 and factory orders data for August, while StatsSA will  report on electricity generated and available for distribution. 

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