Feb. 6 (Bloomberg) -- The rand fell the most in three weeks from a four-month high against the dollar as commodity prices declined and Greek leaders wrestled with austerity measures to get a bailout, damping demand for riskier assets.
South Africa’s currency depreciated as much as 1.8 percent against the dollar, the most since Jan. 13. It traded 1.4 percent weaker at 7.6293 per dollar at 3:45 p.m. in Johannesburg. Against the euro, it slid 0.6 percent to 9.9519.
A measure of commodity prices declined and South Africa’s benchmark stock index fell as Greece’s interim prime minister, Lucas Papademos, and chiefs of the three parties supporting him sought to find consensus in Athens. The rand climbed 3 percent last week to the strongest against the dollar since Sept. 19 after U.S. unemployment dropped to the lowest in three years.
“The rand has steamed ahead, and it is time for a bit of a correction,” Ian Cruickshanks, head of treasury strategic research at Johannesburg-based Nedbank Group Ltd., said by phone. “It is just prudent if you’re an importer now to sell rand after this huge rally. The next trigger is Greece.”
Raw materials account for 60 percent of South Africa’s exports, according to government data.
Papademos struck a tentative deal with political parties to extend spending cuts after euro-area finance chiefs told them an increase in the 130 billion-euro ($170 billion) aid package wasn’t forthcoming. Greece’s next tranche of payouts in maturing debt is due next month. German Chancellor Angela Merkel, speaking after a meeting with French President Nicola Sarkozy today, said “time is running out” for Greece to accept conditions.
“The market is likely to remain preoccupied with the situation in Greece,” Nomvuyo Guma, a currency strategist at Standard Bank Group Ltd. in Johannesburg, said in e-mailed comments. “The nervousness is thus likely to persist.”
South Africa’s 6.75 percent bonds due 2021 declined for a second day, driving the yield up nine basis points, or 0.09 percentage point, to 7.77 percent. The yield rose the most since Jan. 4.
--Editors: Stephen Kirkland, Linda Shen
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