The rand weakened against the dollar on Tuesday and stocks looked set for another fall as investors fled high-risk assets amid persistent worries about the faltering global economy.
Global equities fell and the local blue chip Top-40 March futures contract was down 1,1% ahead of the market opening at 7am GMT.
The rand was trading at 10,16 to the dollar at 6.37am GMT, 1,04% weaker than its previous close of 10,0550.
”The rand is weaker in line with everything else, the dollar had a very good night against [major currencies],” said Jim Bryson, chief dealer at Rand Merchant Bank.
The US dollar surged as investors scrambled for safety from deteriorating global economic conditions and volatile banks.
The euro, which is the currency of South Africa’s largest trading partner, hit a two-month low to the dollar pressured by concerns about recession in eastern Europe and the knock-on effect on European banks.
”It does not look like the dollar wants to stop strengthening … so the rand is toppish at 10,20 to 10,25 for now but above 10,30 it would certainly go higher but not driven by rand factors but by outside influences.”
South African government bonds were also weaker, with the yield on the 2015 bond up 6,5 basis points to 7,995% and that on the 2036 issue rising by seven basis points to 8,255 percent.
The government will auction R850-million of the R206 paper due in January 2014, and R350-million of the R201 bond maturing in December 2014.
The National Treasury said last week weekly bond auctions would rise to about R1,4-billion a week, from R1,3-billion a week in the past few months. – Reuters