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#RandReport: Rand falls ahead of rates call

The rand hit a session low of 13,7430, its weakest since 10 September, and was trading at 13,7235.

Stocks fell almost 2 percent on South Africa's blue-chip Top-40 index, largely driven by a global resource sell-off on fears of weaker Chinese demand. Picture: EWN.

JOHANNESBURG - The rand slid almost 2 percent against a firmer greenback on Tuesday, extending its losses in a 1-1/2 week trough as expectations of a rate hike in the United States soured risk sentiment.

Stocks fell almost 2 percent on South Africa's blue-chip Top-40 index, largely driven by a global resource sell-off on fears of weaker Chinese demand.

The rand hit a session low of 13,7430, its weakest since 10 September, and was trading at 13,7235 by 1514 GMT, down 1,87 percent from Monday's close. The dollar hit an almost two-week high against a basket of currencies.

"Emerging markets have weakened. It's a risk-off scenario today and the Fed didn't do anyone any favours last week," said John Cairns, a currency strategist at Rand Merchant Bank.

The US Federal Reserve kept interest rates unchanged last week, saying economic developments globally were putting downward pressure on inflation, but did not altogether exclude a hike in December, fuelling uncertainty that has hurt sentiment toward emerging assets.

Peers including Turkey's lira, Russia's rouble and the Brazil real also weakened, but the rand fared worse.

The dollar was boosted by comments from United States Federal Reserve officials that pointed to the bank resuming policy tightening by year-end.

The South African Reserve Bank's (SARB) own decision on interest rates is due on Wednesday. A Reuters poll showed 28 of 31 economists expecting the repo rate to remain steady at 6,00 percent.

South Africa's statistics agency publishes consumer and producer inflation data ahead of the rate decision.

In the past two weeks, the rand has struggled to hold on to gains past the 13,25 resistance, leaving it open to a retreat beyond 13,50.

"The expectation is for an initial pullback towards 13,3500 with 13,4000 first stop, this should be used to load up on some cheap dollars," said Maemo Rametse of Standard Bank.

Yields on government bonds were mixed across the curve after they fell at a government auction of long-dated issues. The benchmark 2026 issue added 5 basis points to 8,41 percent.

On the bourse, the world's no. 1 platinum producer Anglo American Platinum led the decliners, ending 8,31 percent lower at 266,70 rand, mirroring the global commodity tumble, following a suppressed Chinese appetite for materials.

Shares in mobile phone operator Vodacom closed 1,41 percent higher, ending 141,47 rand and making it the best performer of the day.

Turnover was 248 million, higher than last year's daily average of 183 million shares.