Rand hit as Japan weakens yen

2011-10-31 09:09

The rand weakened sharply against US dollar today from last week’s rally after Japanese authorities intervened to weaken their currency, sending the dollar to a three-month high.

Growth in credit demand from South Africa’s private sector slowed to 5.47% year-on-year in September from 6.06% in August, strengthening the case for lower interest rates for longer to boost the recovery in Africa’s biggest economy.

However, money supply, the broadly defined M3 measure, accelerated to 6.8% year-on-year compared with 6.22% in August, according to central bank data released at 8am SA time.

The rand traded at R7.84 to the dollar at 8.46am, 1.31% weaker than Friday’s close of R7.73.

“It primarily seems to be driven by the large move in the euro/dollar and also on the back of the Japanese intervention. That seems to be the main driver,” said Leon Myburgh, Sub-Saharan Africa Strategist at Citi.

Government bonds weakened in line with the weaker rand, with the yield on the benchmark four-year bond up three basis points at 6.59% and that on the longer-dated 2026 paper up four basis points at 8.25%.

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