Rand slumps to two-month low

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NewRandMoney

Reuters.

Johannesburg - South Africa's rand stumbled more than 1 percent to its weakest in two months against the dollar on Monday, as a recent raft of weak data rekindled investor concerns about the ailing economy.

The local unit slumped to a session low of 10.6960, a level last seen on March 27 according to Thomson Reuters data, and was trading at 10.6850 by 17:58 SA time, down 1.05 percent from Friday's close.

The rand extend losses after data showed South Africa's new vehicle sales fell 9.2 percent year-on-year in May to 49,465 units.

The market is still reeling from last week's numbers showing the economy shrank in the first quarter of the year, the first contraction since a 2009 recession.

“The underperformance of the rand is quite understandable because for the last 10 days the market has been surprised on the negative side by all the data out of South Africa,” said HSBC EMEA forex strategist Murat Toprak.

“There is a clear substantial deterioration of the macroeconomic situation in South Africa and the market has started to care about the economic dynamics.”

Government bonds weakened alongside the rand, particularly at the longer end of the curve, with the heavily traded 2026 paper adding 7 basis points to 8.385 percent.

The 2015 instrument ticked 1 basis point higher to 6.67 percent. - Reuters


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