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South African Rand Weakens as Manufacturing PMI Falls for Fourth Month
The South African rand weakened on Tuesday after a key survey showed the country's manufacturing sector contracted for a fourth straight month in August, signaling persistent economic headwinds.
Manufacturing Sector Falters
A seasonally adjusted purchasing managers' index (PMI) sponsored by Absa Bank fell to 45.8 in August from 46.8 in July, according to a report from Investing.com. A reading below 50 indicates a contraction in activity, and the latest figure marks the fourth consecutive monthly decline for the index, reportedly driven by shrinking business activity.
Further evidence of slowing economic momentum came from the automotive sector. Data from the National Association of Automobile Manufacturers of South Africa (NAAMSA) showed that new vehicle sales growth eased to 11.4% year-over-year in August, down from 11.9% the previous month.
AdMarket Reaction
In currency markets, the rand traded at 16.1375 per U.S. dollar as of 12:59 GMT, a decline of approximately 0.2% from its prior closing level. The negative economic data also weighed on local equities, with the Johannesburg Stock Exchange's Top-40 index last trading down 0.8%.
The rand's depreciation also occurred amid broad-based strength in the U.S. dollar. The source report noted that renewed geopolitical tensions were contributing to inflation concerns, which supported the dollar against a basket of currencies.
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