Rand slumps 1 percent in commodity currency sell-off
The rand fell more than 1 percent against the dollar tracking losses by other commodity linked currencies.
JOHANNESBURG - The rand fell more than 1 percent against the dollar on Tuesday, tracking losses by other commodity linked currencies as metal prices declined.
The local unit also fell together with a softer euro as investors bet that the European Central Bank could this week signal quantitative easing in the euro zone.
The rand hit a session low of 11.1325 and was at 11.1200 by 1539 GMT, down 1.09 percent from Monday's New York close.
Government bonds were also heavily sold, pushing the yield on the 2026 instrument, the benchmark for the secondary market , 9 basis points higher to 7.665 percent.
"At the moment dollar is king and that's driving the rand weaker. All commodity currencies are under pressure and the rand shouldn't be any different," Bidvest Bank trader Ion de Vleeschauwer said.
"With us not hiking interest rates two weeks ago, the rand is going to be under pressure."
The South African Reserve Bank left interest rates unchanged on 20 November, citing weakness in the economy, but said interest rates would have to go up eventually, in line with rates in the United States.
Uncertainty over the timing and scale of policy tightening in the world's largest economy has dented appetite for high yielding, but riskier emerging market assets.
South Africa's persistent deficits on its budget and current accounts have made the rand more vulnerable than other emerging currencies to shifts in global investor appetite, helping cut more than 6 percent of its value since the start of the year.