Friday, 24 July 2015 20:48
JOHANNESBURG: South Africa’s rand sunk close to its weakest in a decade and a half on Friday as emerging markets suffered when more worrying signs of China’s economic slowdown rattled sentiment toward riskier assets.
The rand slid more than 1.5 percent to 12.6800 at 1316 GMT , its weakest against the dollar since December 2001.
A preliminary survey of thousands of Chinese companies showed the Asian behemoth’s factory sector contracting at the fastest pace in 15 months in July.
The rand, particularly vulnerable during bouts of risk aversion because of South Africa’s wide budget and current account deficits, was the second-weakest performer in a basket of 25 emerging market currencies tracked by Thomson Reuters.
The unit had been on the ropes for most of session despite Thursday’s 25 basis point interest rate hike, finding no relief from the first rate hike in a year as creaking fundamentals and a global commodities selloff weighed.
“There’s nothing specifically South Africa related but the rand is being targeted as it’s still seen as more sensitive to the big external risks,” IGM analyst Christopher Shiells said. Yields on government bonds rose, with the issue due in 2026adding 3.5 basis point to 8.15 percent.
