Rand falls more than 4% on financial woes
Thématique :
sud afrique
Johannesburg/ Business Report / October 21, 2008
The rand fell more than 4 percent against the dollar to a five-day low, tracking general weakness among emerging market currencies hit by risk aversion as the global financial crisis bites.
The resource-heavy bourse however rallied, buoyed by strong industrial and commodity stocks, and also benefitting from the weaker rand, one trader said.
The rand extended its session losses after finance minister Trevor Manuel delivered a medium-term budget policy statement forecasting lower economic growth, and a widening current account deficit.
In the late afternoon yesterday the rand traded 4.68 percent softer at R10.6375 against the greenback, its weakest level since October 16, compared with Monday's close at R10.1615.
"The rand did not do very well today. All emerging market currencies have done badly and the rand has underperformed most others. It's still risk aversion on the whole," a Johannesburg trader said.
"It's pretty much one way. There were times today when there no offers on the machine and it can probably go higher [weaker]. There is just general systematic removal of cash from emerging markets."
The Top40 index of blue chips, however, closed 2.87 percent higher at 19 423.86 points, while the all share index rose 2.67 percent at 21 267.01 points on a strong day for local stocks.
"The commodity stocks are strong and are holding the market up. But then again our industrial stocks are being very good as well," said Barend Saayman, a trader at Thebe Securities.
"It could be of course our rand slipped a bit so that helps the rand hedge counters."
Paper producer Mondi starred on the bourse, gaining 9.06 percent to R41.99, while construction group Aveng rose 9 percent to R45.30 and furniture retailer Steinhoff International was up 8.36 percent at R14.90.
The gold mining index rose 4.2 percent, led by AngloGold Ashanti which increased 8.44 percent to R208.20, while Gold Fields closed 2.2 percent firmer at R70.01. Murray & Roberts , Africa's biggest construction and engineering firm, was up 7.93 percent to R64.65 and cement producer PPC increased 7.88 percent to R26.70.
The rand has shed more than 35 percent of its value against the dollar since the start of the year, knocked in large part by the global credit crunch. The rand is also handicapped by South Africa's large current account gap, which the national treasury said on Tuesday was expected to grow to 7.6 percent of GDP this year, 7.8 percent in 2009 and further to 8.9 percent in 2010.
Like the rand, government bonds fell, nudging the yield on the benchmark 2015 note 10.5 basis points higher to 9.46 percent, while the yield for the R209 due in 2036 was up 7.5 basis points at 8.775 percent.
The rand fell more than 4 percent against the dollar to a five-day low, tracking general weakness among emerging market currencies hit by risk aversion as the global financial crisis bites.
The resource-heavy bourse however rallied, buoyed by strong industrial and commodity stocks, and also benefitting from the weaker rand, one trader said.
The rand extended its session losses after finance minister Trevor Manuel delivered a medium-term budget policy statement forecasting lower economic growth, and a widening current account deficit.
In the late afternoon yesterday the rand traded 4.68 percent softer at R10.6375 against the greenback, its weakest level since October 16, compared with Monday's close at R10.1615.
"The rand did not do very well today. All emerging market currencies have done badly and the rand has underperformed most others. It's still risk aversion on the whole," a Johannesburg trader said.
"It's pretty much one way. There were times today when there no offers on the machine and it can probably go higher [weaker]. There is just general systematic removal of cash from emerging markets."
The Top40 index of blue chips, however, closed 2.87 percent higher at 19 423.86 points, while the all share index rose 2.67 percent at 21 267.01 points on a strong day for local stocks.
"The commodity stocks are strong and are holding the market up. But then again our industrial stocks are being very good as well," said Barend Saayman, a trader at Thebe Securities.
"It could be of course our rand slipped a bit so that helps the rand hedge counters."
Paper producer Mondi starred on the bourse, gaining 9.06 percent to R41.99, while construction group Aveng rose 9 percent to R45.30 and furniture retailer Steinhoff International was up 8.36 percent at R14.90.
The gold mining index rose 4.2 percent, led by AngloGold Ashanti which increased 8.44 percent to R208.20, while Gold Fields closed 2.2 percent firmer at R70.01. Murray & Roberts , Africa's biggest construction and engineering firm, was up 7.93 percent to R64.65 and cement producer PPC increased 7.88 percent to R26.70.
The rand has shed more than 35 percent of its value against the dollar since the start of the year, knocked in large part by the global credit crunch. The rand is also handicapped by South Africa's large current account gap, which the national treasury said on Tuesday was expected to grow to 7.6 percent of GDP this year, 7.8 percent in 2009 and further to 8.9 percent in 2010.
Like the rand, government bonds fell, nudging the yield on the benchmark 2015 note 10.5 basis points higher to 9.46 percent, while the yield for the R209 due in 2036 was up 7.5 basis points at 8.775 percent.
