S.African rand crumbles after sharp fall at start of week

South Africa’s rand remained on shaky ground against the dollar on Tuesday after tumbling as much as 9 percent in the previous session over concerns about both the Chinese and local economies.
The JSE securities exchange’s Top-40 futures index was down 0.97 percent, suggesting the local bourse would open more than 420 points lower at 0700 GMT.

At 0653 GMT, the rand traded 0.51 percent softer at 16.8850 per dollar compared with Monday’s close.

The rand had fallen to a record 17.9950 during Asian trade on Monday, on fears that China wants to weaken its currency aggressively and boost its export competitiveness.

It fared worse than most of its emerging market peers, reflecting additional concerns about the direction of policy in Africa’s most advanced but struggling economy after President Jacob Zuma inexplicably fired the finance minister in December.

“One can only hope that in the shorter term, the market has become a little stretched from all this negativity so far this year and that we get a bit of a relief rally,” Standard Bank trader Warrick Butler said.

In fixed income, the yield for the benchmark government bond maturing in 2026 added 5.5 basis points to 9.74 percent compared to Monday’s close.

It was however still far off the previous session’s four-week high of 9.89 percent.
Source: Reuters