JOHANNESBURG - The rand slumped to a new six-month low yesterday as emerging market currencies suffered a broad sell-off linked to rising US Treasury yields.
At 5pm, the rand was bid at R13.85 to the dollar, 11.01c softer than at the same time on Friday, after earlier yesterday falling to R13.8650 against the greenback. The rand last traded at these levels on April11.
Analysts said the local currency was mostly feeling the heat from market moves in the US, where Treasury yields were at their highest level in several months.
Higher yields for safe-haven US Treasuries dent the appeal of emerging market assets like South African bonds, which are seen as riskier investments.
The yield for South Africa’s benchmark government bond due in 2026 rose 8 basis points to 8.785% yesterday, reflecting a fall in bond prices.
Political risks also weighed on sentiment as the ANC prepares to pick a new leader at a conference in December.
“It’s more to do with US Treasury yields that have shot up, and the rand is sort of a mirror image of that,” TreasuryOne currency dealer, Andre Botha said, adding that a steep fall in the Turkish lira was also prompting a “risk-off” mood.
Meanwhile, the tone for stocks was more upbeat, however.
The benchmark JSE Top40 index closed up 0.61% at 51323.23 points, while the broader all share index rose 0.52% to 57530 points, reaching a new high of 57750 in intra-day trading.
Domestic stocks have been lifted in recent months by the offshore earnings of a few companies, as well as by global flows into emerging market equities.