South Africa’s rand fell as much as 1,9% against the dollar on Friday, testing 21⁄2 month lows as risk aversion fed by debt woes in Europe hit riskier emerging market assets in general.
Government bonds sold off in tandem, with yields hitting multi-month highs across the curve, while stocks broke two days of gains, led lower by miners on faltering commodity prices.
The rand weakened to a session low of 7,1740 against the greenback, its softest level since mid September according to Reuters data. By 15:46 the currency was at 7,12/dollar, down 1,21% from Thursday’s close at 7,0350.
Government bonds fared no better, with the yield on the benchmark 2015 soaring as much as 30 basis points to levels last seen in August before coming back to 7,445%, still up 21 basis points on the day.
The yield on the longer-dated 2026 note jumped 18 basis points to 8505%.
“We’ve been seeing some off-shore accounts offloading South African bonds on Wednesday, into Thursday, and it sort of followed on into today (Friday)’s trading session,” a Johannesburg trader said.
“The major story is risk aversion and that adversely affected the rand, and bonds weakened in tandem. That’s the external factor that pushed yields higher.”
He said some local accounts were also long on paper after well-subscribed government auctions in the last 21⁄2 weeks, with some investors now taking the oppurtunity to trim off some of their stock.
Johannesburg’s Top-40 blue-chip index lost 0,37% to 27 730 43 points on Friday and the broader All-share index fell by the same margin to 31 181 38.
“It’s the peripheral euro zone debt problems and it looks like Portugal might the next in line now,” one trader said.
Miners, weighed by softer metal prices, fell the most on the blue chip index.
Impala Platinum dropped 2,37% to R208,75, Anglo American gave up 1,37% to R325 and AngloGold Ashanti slipped 1,33% at R329,99.
On the upside, Mvela Resources rallied 5,53% to R48,25 after winning long-running case against a former shareholder and paving way to spin-off some its units.
Capital Shopping Centres, boosted by bid interest, was up 2,16% at R43,06.