South African rand weakens after mining output drops

JOHANNESBURG (Reuters) -The South African rand weakened against a firm dollar on Thursday after monthly mining figures showed a drop in production, while analysts had predicted an increase.

The rand traded at 18.9425 against the dollar at 1502 GMT, about 0.7% weaker than its previous close.

The dollar was trading up about 0.4% against a basket of global currencies.

South Africa’s total mining output fell 3.6% year on year in July after a revised 1.3% increase the previous month, Statistics South Africa data showed. Analysts polled by Reuters had predicted a 0.5% increase in July.

“This discrepancy has caused concern for export prospects, which in turn has had a negative impact on the value of the rand,” said Shaun Murison, senior market analyst at IG.

However, he said dollar strength was a bigger factor in the rand’s fall.

The dollar hit its highest level in six months on Thursday, as economic data was mostly stronger than anticipated and the European Central Bank signaled it was finished with its rate hike cycle.

With little else on the economic calendar for the rest of the week, South African investors will turn their attention towards local inflation figures and an interest rate decision by the central bank next week.

Analysts polled by Reuters expect the South African Reserve Bank to keep interest rates on hold at its Sept. 21 meeting.

South Africa’s benchmark 2030 government bond was weaker, with the yield up 3.5 basis points at 10.440%.

Shares on the Johannesburg Stock Exchange closed higher, with the broader all-share index up 1.43% and blue-chip Top-40 index up 1.52%.

(Reporting by Bhargav Acharya and Nellie Peyton;Editing by David Goodman and Richard Chang)