JOHANNESBURG - The rand tumbled to its weakest in nearly three months, bond prices hit a seven-week trough and gold stocks caved as a hawkish speech by the chief of the US Federal Reserve worsened jitters about the local economy’s prospects.
At 5pm, the rand was bid at R13.5598 to the dollar, 16.29c softer than at the same time on Tuesday, its weakest level since July, as comments by Fed chairperson Janet Yellen late on Tuesday emphasised the need to continue with rate hikes.
The speech saw the dollar and US Treasury yields rally hard and emerging market assets across the board hit by outflows.
“Everybody is weak, everybody is taking a beating against the dollar. Higher rates in the US at this stage are really bad for emerging markets,” said chief currency dealer at TreasuryOne, Wichard Cilliers.
Traders said South Africa’s dismal economic outlook and ongoing political turmoil was set to worsen sentiment toward the rand and sharpen the downward trend.
Thousands of South Africans on Wednesday marched against corruption under President Jacob Zuma’s rule in protests led by unions which have backed a rival to the president’s faction as the next leader of the ANC.
Bonds also weakened, with yield on the benchmark paper due in 2026 rising.
On the bourse, gold stocks took a knock as safe-have bullion buying subsided, with Harmony Gold and Sibanye-Stillwater losing out the most. The pair fell 2.18percent to R24.22 and 2.58percent to R14.75, respectively.
But the JSE Top40 index rose 0.41% to 49018.25 points, while the all share index gained 0.26% at 55214.07 points.