Rand drops further against dollar

Johannesburg - The rand fell nearly 2% against the dollar on Tuesday, with traders saying the bearish trend is not over.

Its losses made it the session's second-worst performer of 20 emerging market currencies tracked by Reuters.

The rand hit a two-week high of R7.8060 in the previous session, then retreated after meeting resistance.

Government bonds followed the rand’s weak trend, with yields rising across the curve after an auction where there was poor demand for local debt.

The rand hit a session low of R7.9925 to the dollar and was trading at R7.9641 at 09:12 GMT from Monday’s close of R7.85.

“We could not break through R7.80 so there’s a reaction to that. The euro coming off its highs is not really helping,” said Jim Bryson, chief dealer at Rand Merchant Bank.

The rand has been volatile in the past two months, losing more than 20% to hit a 28-month low of R8.4950 in a space of three weeks in September. The month was its worst since late 2008, at the start of the financial crisis.

The volatility is likely to continue until there is a resolution to the eurozone’s debt crisis, which has raised fears of another global economic slump.

For now, the rand’s gyrations have made some dealers too nervous to take significant positions - exaggerating its daily moves.

On fixed income, the yield on the 2015 bond went up 7 basis points to 6.69% and that on the 2026 note up 9 basis points to 8.36%.