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Johannesburg - The rand fell 2.4% against
the dollar on Monday and government bonds extended last week’s losses as South
African markets suffered another bout of investor risk-aversion.
The rand opened at 8.10 and even firmed slightly in early trade but
was down 2.4% to 8.2760 by late afternoon as investors withdrew from
risky positions while a solution to Europe’s debt crisis eludes markets.
“The rand remains on the back foot as it seems fresh realisations
that the (EU) summit provided little to address the debt crisis are sinking in,”
said Anisha Arora, emerging market analyst at London-based 4Cast.
However, dollar gains on the rand are seen capped below the 8.30
level despite the euro’s weakness in the session, as the rand’s previously
strong correlation with the euro subsides during thin holiday trade.
“Nevertheless EUR/USD remains a proxy for general risk appetite and
is a key rand river,” Arora added.
Volumes were looking to come in at five-month lows by end of trade.
Yields on the benchmark four-year and 15-year government bonds rose
for the sixth day.
At the official close on Monday, the four-year yield ended at 6.845
percent from 6.77 percent and the 15-year was at 8.57 percent from 8.49 percent
on Friday.
Off-shore bond buying is down 19 billion rand compared to this
period last year but foreign accounts continue to show some interest in local
debt, picking up 1.4 billion rand worth of debt last week.
