THE RAND slipped yesterday In spite of economic activity picking up momentum as early signals of turning points in business cycles rose to a four-month high in February.
The SA Reserve Bank (Sarb) yesterday said the composite leading business cycle indicator rose by 2 percent month-on-month in February, aided by the easing of the lockdown restrictions.
In spite of promising economic indicators data, the rand had weakened to R14.30 against the dollar by 4pm yesterday from R14.23 close on Monday as the greenback retreated.
TreasuryONE currency strategist Andre Cilliers said the dollar had weakened further despite an uptick in US Treasury yields, however emerging markets had not gained much.
“The local currency remains stuck in a fairly tight range for now,” Cilliers said.
The persistent monthly growth momentum in the leading indicator in February marked the ninth successive monthly growth, in line with the anticipated domestic economic growth rebound.
The leading indicator rose to 116.8 points in February, from a revised 114.5 in January.
In February, the government announced Adjusted Level 3 lockdown measures which were later eased to Alert Level 1, while schools were reopened during the month.
The bank said increases in four of the ten available component time series outweighed decreases in the remaining six components.
The Sarb said the largest contributors to the February print were an increase in the number of residential building plans approved and an acceleration in the 12-month rate of increase in job advertisement space.
The composite coincident business cycle indicator also increased at a month-to-month rate of 0.1 percent in January as industrial production increased during the month.
Investec chief economist Annabel Bishop said the coincident indicator concurred with other January data showing a weak start to 2021, while the leading indicator supported a lift in the fourth quarter of this year.
Bishop said, “So far industrial production is up 0.4 percent quarter-on-quarter for the first two months of 2021, but February was a particularly strong month for the mining sector,” Bishop said.
“Economic activity is very uneven between sectors and sub-sectors, which is to be expected as lockdown restrictions differentiated last year by sector and so there are differing levels of damage.”
Meanwhile, South Africa’s government sold a total of R4.8 billion of its 2031, 2037, and 2048 bonds yesterday but yields fell compared with the previous auctions.
BUSINESS REPORT ONLINE