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Rand falls to four-year low

Johannesburg - The rand tumbled to a four-year low on Wednesday, extending the week's losses in a global sell-off of emerging markets and driving bonds to their lowest in months.

The rand softened for the third straight day, falling as low as R10.5100/$, its weakest since March 2009.

Investors have been moving out of risky emerging markets because of uncertainty over whether the United States will continue its massive stimulus programme and the possibility of military intervention in the Syrian crisis.

South Africa is more vulnerable to external shocks than its peers because of negative sentiment around labour strikes in leading sectors of the economy such as manufacturing, which add to concerns about the gaping current account deficit.

Market players said there looked to be no impetus for investors to undo their long dollar positions and the rand would likely stay weaker for the remainder of the session.

The rand was the third-weakest currency after the Turkish lira and Indian rupee among a basket of emerging market currencies trading against the dollar and tracked by Reuters.

"The market has moved to a new high in overnight trade reaching the R10.50 target area before slipping back. Above here the next significant (dollar) resistance is around 1R0.60 then R10.66," said Neil Irving of 4Cast.

Short-dated government bonds weakened, with yields rising to their highest in over two months, while the longer end was sold off less vigorously.

The 2015 yield, a benchmark for the front end of the yield curve, gave up 8.5 basis points to 6.56%, its highest since June 24.

Power utility Eskom is looking to place R200m of its ES42 CPI-linked bond. Dealers expect the market demand for long-dated paper should result in a successful auction for the utility. Results are due after 11:00.

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Rand - Dollar
19.73
-0.3%
Rand - Pound
24.34
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