/ 14 October 2013

Rand weakens on US debt stalemate

Rand Weakens On Us Debt Stalemate

The rand declined for the first time in five days as US lawmakers struggled to reach an accord on raising the nation’s debt limit and restoring government operations, damping demand for riskier assets.

Senate leaders have yet to reach an agreement on how to end the US fiscal impasse amid mounting concern in financial markets three days before the government’s borrowing authority lapses. South African retail sales grew at the slowest pace in 3 1/2 years in August, a report may show this week.

"The markets remain exceptionally cautious as the possibility of a default, although unlikely, is a scenario nobody can afford," said Mohammed Nalla, head of strategic research at Nedbank Group.

The congressional deadlock over increasing the US debt ceiling from $16.7-trillion is threatening the US and world economies, said International Monetary Fund managing director Christine Lagarde.

"If there is that degree of disruption, that lack of certainty, that lack of trust in the US signature, it would mean massive disruption the world over," Lagarde said in an interview on NBC's Meet the Press programme about the effect of not raising the borrowing limit. "And we would be at risk of tipping, yet again, into recession."

South Africa retail-sales growth slowed to 1.1% in August, from 2.8% the previous month, a report may show on Wednesday, according to the median estimate of 10 economists in a Bloomberg survey. Growth at that rate would be the slowest since February 2010, according to data compiled by Bloomberg. – Bloomberg