World Markets

South Africa's rand hits new 3-week low, stocks slip

Credit: REUTERS/THOMAS WHITE

South Africa's rand slumped to a new three-week low in an emerging market rout on Friday as investors' hopes for a global recovery were dented by a sharp contraction in the U.S. economy.

Adds latest prices, analyst comment

JOHANNESBURG, July 31 (Reuters) - South Africa's rand slumped to a new three-week low in an emerging market rout on Friday as investors' hopes for a global recovery were dented by a sharp contraction in the U.S. economy.

At 1640 GMT, the rand ZAR=D3 was 1.63% weaker at 17.0250 per dollar, its weakest since July 8, adding to Thursday's 2% plunge.

Sentiment towards the rand has been driven by offshore events in recent weeks, with stimulus programmes by developed market central banks and a relaxation of lockdown restrictions spurring the currency to pre-COVID-19 pandemic levels in June.

But signs of a resurgence in global infections have since tamed global demand for assets perceived as risky. That has put renewed pressure on the rand, which was already vulnerable given South Africa's economic recession and jump in coronavirus cases.

"Fearful of the fundamental economic weakness across the globe, investors have fled to U.S. treasuries and gold. As you’d expect, EM (emerging market) currencies are struggling, with the rand surrendering 20c to the dollar," said RMB's Nema Ramkhelawan-Bhana.

Data on Thursday showed the United States, the world's largest economy, contracted at its steepest pace since the Great Depression in the second quarter.

South African stocks dipped, tracking global markets.

The Johannesburg Stock Exchange's Top-40 Index .JTOPI fell 0.16% to 51,369 points, and the broader All-Share Index .JALSH closed down 0.22% at 55,722 points.

Among the fallers, the bullion sector .JGLDX shed 2.45%, with AngloGold Ashanti ANGJ.J down 5.34% to 554.73 rand.

Shares in MTN MTNJ.J closed down 2.46% after scrapping its 2020 interim dividend and announcing its CEO had been appointed to head the enterprise unit of British broadband and mobile operator BT BT.L from next year.

Bonds were firmer, with the yield on the benchmark government bond due in 2030 ZAR2030= down 5 basis point to 9.245%.

(Reporting by Mfuneko Toyana and Tanisha Heiberg; Editing by Mark Potter)

((mfuneko.toyana@thomsonreuters.com; +27117753153; Reuters Messaging: mfuneko.toyana.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest World Markets Videos

Shanghai Resumes Work in Some Factories Amid Virus

May 13, 2022

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More