Bloomberg News

Rand, South African Bonds Weaken on European Debt-Crisis Concern

September 14, 2011

Sept. 14 (Bloomberg) -- The rand weakened for a second day against the dollar and bond yields climbed to the highest in a month as commodity prices slumped on concern the euro-zone debt crisis will dim prospects for the nation’s raw-material exports.

The currency of Africa’s biggest economy depreciated as much as 1.8 percent to 7.4337 per dollar and traded 1.1 percent weaker at 7.3820 as of 3:41 p.m. in Johannesburg. The 13.5 percent notes due 2015 dropped 37 cents to 122.533 rand, boosting the yield eight basis points, or 0.08 percentage point, to 6.936 percent. The yield has climbed 61 basis points since falling to a record low of 6.327 on a closing basis on Sept. 9.

Greek Prime Minister George Papandreou will hold a conference call with German Chancellor Angela Merkel and French President Nicolas Sarkozy today amid increasing speculation that Greece will default. Commodities gauged by the S&P GSCI Index slumped to a two-week low, weighed down by investors’ concerns

“The market is still straining under debt and global growth fears,” Standard Bank Group Ltd. analysts led by Johannesburg-based Michael Keenan wrote in a research note. “We still favor selling into rand strength,” they added, referring to selling the currency when it temporarily rallies.

The rand may decline to 7.52 per dollar this week, the Standard Bank analysts said.

The Manila-based Asian Development Bank cut its growth forecasts for the region excluding Japan today and raised the area’s inflation estimate to 5.8 percent this year, from a previous forecast of 5.3 percent, saying price increases will put pressure on policy makers to raise rates even as a faltering global recovery curbs growth.

China, the top user of copper, energy and grains, raised interest rates for the third time this year in July to combat rising consumer prices.

--Editors: Ana Monteiro, Linda Shen

To contact the reporter on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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