adminTHE rand weakened by the most in nine weeks against the dollar to lead losses among global currencies as evidence of subdued global economic growth prompted declines in commodities.
The rand fell as much as 2,5 percent, the most on a closing basis since February 26 and the worst performance among 31 emerging market and developed nation currencies. Prices of commodities were declining for a second day, as was the MSCI Emerging Markets Currency Index.
The rand was also dragged lower as the Australian dollar tumbled after the central bank unexpectedly cut interest rates to a record as it seeks to help spur a revival in industries outside mining.
After gaining 1,2 percent to rack up a third week of gains last week, the rand retreated 2,3 percent to 14,6070 at 5:43pm in Johannesburg, weakening beyond its 200-day moving average for the first time since April 18.
A breach of that level is seen by some technical analysts as a bearish signal for the South African currency.
“The rand tends to be more excessive in its weakening and strengthening,” said Ion de Vleeschauwer, chief dealer at Bidvest Bank.
“People use the rand as a proxy for other emerging-market bets.
“That’s just the nature of the currency.”
The rand gained for a third month in April, supported by a surge in inflows into the bond market.
Figures from the JSE on Tuesday suggest that trend may be reversing, with offshore investors selling R1 billion of local debt after buying R8,3 billion the week before. – Bloomberg
Online Reporter