JOHANNESBURG, May 7 (Reuters) - South Africa’s rand dipped early on Thursday, erasing gains of the previous session as risk sentiment was dampened by resurfacing of tensions between China and the United States and more signs of economic weakness locally.
At 0645 GMT the rand was 0.07% weaker at 18.7480 per dollar, adding to the previous day’s 1% drop in the face of growing demand for the greenback by nervous investors unconvinced by the prospects of an emerging market recovery.
Dour data from China, where most official coronavirus lockdowns ended more than two months ago, showed service sector activity still mired in contraction in April, while consumption figures revealed a sharp decline in imports.
That added to pressure on risk sentiment as the Trump administration renewed its criticism of China and weighed punitive actions against Beijing over its early handling of the virus outbreak.
Locally, a plunge in the purchasing manager’s index to all-time lows and the protracted wind-down of national airline SAA, where the government hopes to ward off liquidation, drove home again the fragile state of the economy and government finances.
Bonds continued to rally, with the yield on the government issue due in 2030 down 15.5 basis points to 9.625%.
Reporting by Mfuneko Toyana Editing by Mark Heinrich