South African rand falls after PMI shows business decline

A street money changer counts South African Rands in Harare
A street money changer counts South African Rands in Harare, Zimbabwe, File. REUTERS/Philimon Bulawayo

JOHANNESBURG, Feb 3 (Reuters) - The South African rand fell against the dollar on Friday, after the release of a whole-economy survey that showed business activity shrinking in Africa's most industrialised economy.

By 1548 GMT, the rand was trading at 17.4000 against the dollar, down 1.77% from its previous close of 17.0975.

S&P Global's South Africa Purchasing Managers Index (PMI) (ZAPMIM=ECI) fell to 48.7 in January from 50.2 in December. Readings below 50 indicate a contraction in activity.

It was the fastest pace of contraction since the end of 2021 as new orders fell due to rolling power cuts and weak economic conditions, the survey showed.

Last week South Africa's central bank slashed its growth forecasts for 2023 and 2024 to 0.3% and 0.7% respectively, saying power outages could wipe as much as 2 percentage points off this year's growth.

The dollar jumped on Friday after data showed that U.S. employers added significantly more jobs in January than economists expected, potentially giving the Federal Reserve more leeway to keep hiking interest rates.

On the Johannesburg Stock Exchange, the All-Share index (.JALSH) was up 0.55%.

The government's benchmark 2030 bond was weaker, with the yield up 8.5 basis points to 9.585%.

Reporting by Alexander Winning and Nellie Peyton; Editing by Clarence Fernandez

Our Standards: The Thomson Reuters Trust Principles.