Rand weakens as EM appetite wilts

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IOL mot mar11 rand notes AP

Johannesburg - The rand touched its softest level in a week against the dollar on Thursday and government bonds also fell as sentiment towards emerging currencies turned negative ahead of a European Central Bank statement.

The rand was down 0.5 percent at 10.6630 to the greenback at 0636 GMT compared with Wednesday's close at the New York session.

The yield on government debt maturing in 2026 added 2.5 basis points to 8.53 percent, as did that for shorter-dated 2015 paper, which traded at 6.815 percent.

“Emerging markets and other high-risk currencies continue to diverge from the general risk-on tone,” said RMB analyst John Cairns, adding however that currencies such as the Turkish lira and the Brazilian real were bucking the trend.

“US yields are pushing up again, which is limiting the appeal of emerging market bonds. In our view, a push up in US yields is probably the biggest threat hanging over the rand at the moment,” Cairns added.


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