South African bonds yields rose to the highest in a year as foreign investors sold the nation’s debt and equities. The rand swung between gains and losses as exporters converted earnings from abroad to the local currency.
Foreigners sold a net 7 billion rand ($684 million) of bonds last week and 608 million rand of equities, according to Bloomberg calculations from JSE Ltd. data, after the Federal Reserve indicated it may start paring asset purchases should risks to the economy abate. Gold and platinum prices slumped and the dollar gained as Goldman Sachs Group Inc. lowered its estimate on China’s economic expansion amid concern over a cash crunch in the largest purchaser of South African raw materials.
Yields on 10.5 percent rand-denominated government debt due December 2026 jumped 12 basis points, or 0.12 percentage point, to 8.35 percent as of 2:44 p.m. in Johannesburg, heading for the highest closing level in a year. The rates climbed 45 basis points last week. The rand gained 0.2 percent to 10.1397 per dollar after earlier falling as much as 1.4 percent. The FTSE/JSE Africa All Share Index (JALSH) declined 2 percent.
“We’re seeing inflows from local companies repatriating offshore earnings back into the country,” helping to support the rand, Ion de Vleeschauwer, head currency dealer at Johannesburg-based Bidvest Bank Ltd., said by phone today. “It’s keeping a lid on the market” and the rand will probably weaken once the flows dry up in line with a stronger dollar and the weaker bond and equity markets, he said.
The rand and the Japanese yen were the only gainers against the dollar today among 16 major currencies monitored by Bloomberg. South Africa’s unit has weakened 16 percent against the dollar this year, 2013’s worst performer, while the yen has dropped 11 percent.
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