South Africa's rand recovers, vulnerable to waning risk appetite

By Zimasa Mpemnyama JOHANNESBURG (Reuters) - South Africa's rand firmed against the dollar on Thursday, bouncing back from a near 4-week low hit in the previous session, but the currency was vulnerable as risk sentiment was soured by slow global growth. At 0857 GMT, the rand had traded at 14.8900 per dollar, 0.83 percent firmer from Wednesday's New York close of 15.0150, which was its weakest level since April 8, according to Thomson Reuters data. "It is just a correction basically, it fell very steeply yesterday so I think there were some people cashing in on that movement," NKC African Economics economist Bart Stemmet said. "The rand is slowly edging it's way stronger, a big risk of course is U.S. interest rate hikes and a possible (credit ratings) downgrade, that will limit the rand improvement during the rest of the year." NKC said in a note that the rand could fall if U.S. jobs data on Friday beat expectations. The rand stumbled on Wednesday hit by the brunt of a general sell-off in riskier assets due to worries about a global economic downturn at a time when South Africa's own economy is also struggling to grow. A stronger outcome to the U.S. jobs data could increase the chances of the Federal Reserve raising interest rates, lending some support to the dollar. Locally, activity in South Africa's private sector shrank again in April, albeit at a slower pace than it had in the previous month, as output and new orders fell and companies cut jobs to the greatest extent on record, a survey showed on Thursday. South Africa's economy is struggling to grow, and Finance Minister Pravin Gordhan on Wednesday singled this out as a pressing challenge for the government. Ratings agencies have also warned of possible downgrades should Africa's most industrialised country show a lack of commitment to reining in its budget deficit. Standard & Poor's and Fitch rate South Africa a notch above sub-investment grade, while Moody's has it two notches above. On the stock market, the Top-40 index rose 0.3 percent while the broader all-share was up 0.2 percent. Government bonds also firmed, and the yield for the benchmark instrument due in 2026 was down 1.5 basis points to 9.17 percent. (Writing by Olivia Kumwenda-Mtambo; Editing by James Macharia)