Rand declines for first day in four

Comment on this story
NewRandMoney Reuters.

Cape Town - The rand weakened from a seven-week high against the dollar as a fresh political crisis in Turkey soured investor sentiment toward emerging markets.

Turkish opposition leaders called for the resignation of Prime Minister Recep Tayyip Erdogan after a leaked recording in which he appeared to discuss concealing funds from a probe into government graft.

The Turkish lira slumped as much as 1.1 percent, along with most emerging-market currencies monitored by Bloomberg. Economic growth in South Africa accelerated in the fourth quarter, a report may show today.

The rand “is set for a very volatile day as the markets try to asses the seriousness of the Turkish situation,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in a client note.

“If the recording is proven to be undeniably true then Turkey’s political situation is going to go from bad to worse and the lira could fall a lot further. The rand, presumably, would fall in tandem.”

South Africa’s currency declined 0.3 percent to 10.8249 per dollar by 9:46 a.m. in Johannesburg after gaining 1.2 percent yesterday to the strongest level since January 10.

Yields on rand bonds due December 2026 dropped three basis points, or 0.03 percent, to 8.59 percent.

Gross domestic product probably expanded 3.4 percent in the three months through December from 0.7 percent in the previous quarter, according to the median estimate of 21 economists in a Bloomberg survey.

That would give the central bank room to raise interest rates to combat inflation, while easing pressure on Finance Minister Pravin Gordhan as he prepares to present his annual budget to lawmakers tomorrow.

The South African Reserve Bank’s leading indicator, a composite measure of the future state of the economy, was little changed at 100.2 in December, data showed today.

International investors bought a net 957 million rand of South African bonds yesterday while selling 364 million rand of equities, according to JSE Ltd. data. - Bloomberg News


sign up
 
 

Comment Guidelines



  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.