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Rand hit as Japan weakens yen


The rand weakened sharply against US dollar on Monday 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 06:00GMT.

The rand traded at R7,8395 to the dollar at 06:46GMT, 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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