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Rand Declines to Two-Week Low as Euro, China Concerns Trigger Stop-Losses
The rand slumped to a two-week low against the dollar as renewed concern about Europe’s debt crisis and China’s economic growth hurt demand for riskier assets and pushed the currency through levels that triggered automatic sell orders.
The rand fell as much as 1.7 percent to 8.0957, the weakest since Oct. 4, and traded 1.1 percent down at 8.0474 as of 5:02 p.m. in Johannesburg.
Moody’s Investors Service said France’s top credit rating is under pressure, after a spokesman for German Chancellor Angela Merkel said Europe’s leaders won’t resolve the sovereign- debt crisis this year. Economic growth in China, the biggest buyer of South African raw materials, expanded at the slowest pace since 2009 in the third quarter. Emerging-market stocks snapped nine days of gains and commodity prices fell.
“Risk aversion reared its ugly head again,” Standard Bank Group Ltd. analysts led by Johannesburg-based Michael Keenan said in a research note today. “This morning’s disappointing GDP data out of China bodes ill for South Africa’s trade prospects and the rand.”
The rand may decline to 8.21 per dollar after breaching 8.04, a key level, the Standard Bank analysts wrote.
South Africa’s 6.75 percent bonds due 2021 fell for a second day, pushing the yield up six basis points, or 0.06 percentage point, to 8.14 percent, the highest since Oct. 6.
To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
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