Rand hits week-lowComment on this story
Johannesburg - The rand fell to its weakest level against the dollar in more than a week after North Korea tested a nuclear weapon in defiance of the United Nations, prompting investors to shun riskier assets.
South Africa’s currency slipped as much as 0.7 percent to 8.9785 per dollar, the weakest intraday level since February 1.
It traded 0.7 percent down at 8.9720 as of 8:57 a.m. in Johannesburg.
Yields on benchmark 10.5 percent bonds due December 2026 were unchanged at 7.31 percent after rising one basis point yesterday.
North Korea held its third nuclear test today, three weeks after the UN increased its sanctions, underscoring a disregard for an international community that has already isolated the totalitarian state from the global economy.
The dollar gained against all 15 major currencies monitored by Bloomberg as investors turned to the safety of the US currency.
“A resurgent dollar followed geopolitical tensions with North Korea testing nuclear weapons,” Quinten Bertenshaw, an analyst at ETM Analytics in Johannesburg, said in e-mailed comments.
“This has immediately been reflected in the rand as a rotation to safety ensued.”
North Korea detonated underground ‘‘an atomic warhead that is lighter and miniaturised but with a big explosive charge,’’ the official Korean Central News Agency said in a statement.
South Korea’s Defense Ministry estimated the yield at 6 to 7 kilotons, bigger than the previous two tests.
The atomic bomb dropped on Hiroshima had an estimated yield of 15 kilotons.
The rand also weakened before the release of data that may show retail sales in South Africa slowed, adding to evidence growth in Africa’s biggest economy is stalling.
Retail sales growth slowed to 1.6 percent in the year through December, from 3.4 percent the month before, according to the median estimate of 12 economists in a Bloomberg survey. The report is due tomorrow. - Bloomberg