Rand retreats on Brexit fears

Picture: Siphiwe Sibeko

Picture: Siphiwe Sibeko

Published Jul 6, 2016

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Johannesburg - South Africa's rand retreated 0.64 percent against the dollar on Wednesday, dragged down by worries over the domestic impact and renewed global fears over the impact of Britain's departure from the European Union.

Read also: Rand slips as commodities drop

The JSE securities exchange also weaker, with the Top-40 index down 0.74 percent at 45,008 points while the All-Share index shaved off 0.57 percent to 51,374 points.

At 07h05 GMT the rand traded 0.71 percent softer at 14.8600 versus the dollar, compared with Tuesday's close at 14.7550.

The rand has come under renewed pressure as recent data points to sluggish growth in Africa's most industrialised economy, leaving it vulnerable to sovereign credit rating downgrades before year-end.

The local currency, like other emerging markets, was also victim on Wednesday to renewed fears over instability in the European Union after Britain voted to exit the grouping last month, triggering risk aversion.

“Morning markets appear to remain cautious... Brexit risks currently dominate,” analysts at Nedbank said in a note, adding that minutes of the most recent US Federal Reserve meeting, due out later on Wednesday, would give the market further steer.

South African government bonds tracked the weaker rand, with the yield for the 2026 benchmark edging up 1.5 basis point to 8.84 percent.

REUTERS

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