#RandReport: Rand hits 3-month low on soaring dollar

At 15:15 GMT the rand was 1.4% weaker at R12.2600 against the US currency after hitting its weakest since 18 January earlier in the day.

Picture: EWN

JOHANNESBURG - South Africa’s rand slumped to a three-month low on Monday, as emerging market currencies were pressured by a soaring dollar.

At 15:15 GMT the rand was 1.4% weaker at R12.2600 against the US currency after hitting its weakest since 18 January earlier in the day.

Other emerging market currencies such as the Russian rouble and Brazilian real saw steep losses, as the dollar rallied to a seven-week high on the back of rising US bond yields.

Hussein Sayed, chief market strategist at FXTM, said the rand could soon weaken beyond R12.30 to the dollar.

The sharp move in the rand comes at the end of a relatively quiet few weeks for the South African currency, which has traded in a tight range against the dollar.

Warrick Butler, executive head of rand trading at Standard Bank, said that despite Monday’s slump “the overall trading environment remained cautiously optimistic”.

The rand and South African assets surged in the wake of Cyril Ramaphosa taking the helm of the ruling African National Congress in December. Ramaphosa, who then replaced Jacob Zuma as head of state in February, has promised to revamp the economy and woo foreign investors.

“There is still value to be found in our interest rate curve for foreign index trackers with a real interest rate return of over 2%,” Butler said in a note to clients. “The inflow of foreign capital continues.”

Rand-denominated bonds also fell on Monday, with the yield on the benchmark instrument due in 2026 up 11.5 basis points to 8.155%.

Trading on the bourse was mixed as stocks reacted to the weaker rand.

Financial and retail shares notched up the largest falls, with FirstRand weakening 3% and NedBank shedding 2.3%.

Miners with South African operations such as Anglo American and Gold Fields fared better, both rising more than 1%. The benchmark Top-40 index ended 0.22% higher at 50,877.98, while the wider All-share index climbed 0.17% to 57,679.51.