Rand weakens for second day

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Cape Town - South Africa’s rand declined for a second day on speculation the Federal Reserve will start reducing monetary stimulus next week that drove demand for higher-yielding currencies in emerging markets.

Data today may show US consumer spending increased last month.

Factory-gate inflation in South Africa slowed to 6.1 percent in November from 6.3 percent the previous month, a report may show today, according to the median estimate of 14 economists in a Bloomberg survey.

“Markets continue to abound with theories and rumours regarding the various scenarios regarding the tapering of quantitative-easing measures,” Mohammed Nalla, head of strategic research at Nedbank Group Ltd. in Johannesburg, said in an e-mailed note, referring to US stimulus.

“The effect of this has manifested itself in the price action and volatility levels in the foreign exchange markets” and put pressure on the South African currency, he said.

The rand weakened 0.2 percent to 10.3947 per dollar as of 9:53 a.m. in Johannesburg.

Yields on benchmark bonds due December 2026 rose two basis points, or 0.02 percentage point, to 8.26 percent.

The Fed may begin reducing $85 billion of monthly bond purchases at its December 17-18 meeting, according to 34 percent of economists surveyed December 6 by Bloomberg, up from 17 percent in a November 8 poll.

Retail sales rose 0.6 percent in November, the most since June, a separate Bloomberg survey showed before a Commerce Department report due at 3:30 p.m. Johannesburg time. - Bloomberg News

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