Rand weakens to 5-week low

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NewRandMoney

Reuters.

Cape Town - The rand depreciated for a third day, reaching its lowest level in almost five weeks, on concern slowing global growth is denting South Africa’s export prospects after the nation posted a record monthly trade shortfall.

The currency of Africa’s biggest economy slumped as much as 0.6 percent to 9.1175 per dollar, the weakest level since January 29.

It traded 0.3 percent down at 9.0865 as of 4:12 p.m. in Johannesburg, bringing its decline this year to 6.8 percent, the worst performance among emerging-market peers tracked by Bloomberg.

Yields on benchmark 10.5 percent bonds due December 2026 fell two basis points, or 0.02 percentage point, to 7.37 percent.

Gross domestic product in the euro area, South Africa’s biggest trading partner, fell 0.6 percent in the fourth quarter, data will show this week, according to the median estimate of economists in a Bloomberg survey.

China, the biggest buyer of South African raw materials, called for measures to cool property prices, curbing demand prospects for industrial metals.

Commodities accounted for 53 percent of South Africa’s exports in 2012, according to government data.

“Looking at developments abroad where the weak growth environment is set to continue, demand for South African exports will remain tepid,” Quinten Bertenshaw, a Johannesburg-based analyst at ETM Analytics, said in e-mailed comments.

“The argument for more rand weakness in coming months remains intact.”

Standard & Poor’s GSCI Index of raw materials fell as much as 0.3 percent after the Chinese government called for higher down payments and interest rates for second-home mortgages in some cities.

South Africa’s benchmark stock index declined for the first time in three days.

South Africa’s trade gap reached 24.5 billion rand ($2.7 billion) last month compared with 2.7 billion rand in December, the Pretoria-based South African Revenue Service said on February 28, more than the 9.7 billion rand median estimate of economists in a Bloomberg survey. - Bloomberg News


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