S.Africa's rand on back foot as rate cut eyed

JOHANNESBURG (Reuters) - South Africa's rand was on a weaker footing on Tuesday as the country's economic downturn heightens expectations of an interest rate cut.

The rand was at 9.0128 to the dollar at 0616 GMT, 0.2 percent weaker than Monday's New York close.

Data released on Monday showed that South Africa's unemployment rate rose to 25.2 percent of the labour force in the first quarter of 2013 compared with 24.9 percent in the final quarter of last year.

Expectations that the South African Reserve Bank (SARB) could cut interest rates in the next six months are weighing on the rand, analysts said.

"With signs emerging that SA is indeed in a cyclical down turn, that the growth in the credit extension numbers is moderating and that inflation is subsiding, the risk that the SARB follows the direction from many central banks abroad and further reduces domestic rates is high and rising," Tradition Analytics wrote in a research note.

The yield on the 2026 government bond was flat at 6.71 percent while that on the 2015 paper was down 2 basis points at 5.09 percent.

South Africa will auction 2.35 billion rand worth of 2023, 2036 and 2041 government bonds later on Tuesday.

Source: http://news.yahoo.com/africas-rand-back-foot-rate-cut-eyed-070021925.html

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