Weak rand

RMB AM and Business Day reports that the local currency was testing a key support level in the face of offshore selling, while bonds were steady after a dramatic rally sparked by benign producer price index figures.

By late afternoon, the rand was trading at R6,7225 to the dollar, about 1,7% weaker than its levels late on Thursday, after initially firming to R6,57 against the dollar.

It has depreciated about 8%against the greenback since the Reserve Bank unexpectedly cut its repo rate by half a percentage point to 7.50% two weeks ago, reducing the yield appeal of the currency to foreign investors.

Surprisingly benign consumer and producer price figures last week have helped justify the move, which wrong footed domestic markets and sparked speculation it might have been motivated by pressure to halt the currency's two-and-a-half year rally.

But now there is even starting to be speculation of another interest rate cut at the next monetary policy meeting in October, although most analysts expect interest rates to stay on hold for the rest of this and probably also next year.

The dollar rallied across the board on Friday in a technically driven session, bolstered by US economic reports that matched or beat expectations.

The euro traded at its three-week low at $1,2003.