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Rand hit as Japan weakens yen

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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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