OWN CORRESPONDENT, Johannesburg | Thursday 6.00pm
THE rand has hit a fresh low against the US dollar, knocked by renewed euro weakness, reports of political violence in Zimbabwe and offshore selling by US-based banks.
The embattled currency — which has lost more than 12% of its value to the US unit so far this year – traded at R6,89 to the dollar at 2.00pm from R6,83 early in the day, with dealers warning of further slides if that key support level was broken.
”If we break [decisively] through R6,88, we could head towards R6,90 — but if it holds we should go back to around R6,85,” Deutsche Bank trader Jan Firnges said. Traders said the latest move was triggered by buying of dollars against the rand from banks in New York and San Francisco.
Most of the rand’s slide this year has been attributed to weakness in the euro – which has repeatedly hit record lows against the dollar this week – but more recently the political crisis in neighboring Zimbabwe has also hit sentiment. Opposition officials reported more political violence on Thursday in Zimbabwe, where a land-grab campaign aimed at white farmers has stalled the already weak economy and threatens growing international isolation.
Economists believe that the contagion fears which are dogging South African assets are unfounded, as the country’s economy dwarfs its neighbor, which takes less than four percent of its total exports.
But the rand’s latest slide continued to take its toll on the debt market, with yields on the benchmark five-year R150 bond rising back to 14% from 13,94% earlier in the day, as prices fell. — Reuters