Rand falls to month low as risk appetite wanes

Johannesburg - The rand fell to a four-and-a-half week low against the dollar early on Wednesday, still dogged by a report pointing to depressed confidence in the local factory sector, while upbeat US data boosted the dollar across the board.

Government bonds tracked the currency lower, with yields for the benchmark 2026 and 2015 instruments each rising 3.5 basis points to 8.345% and 6.71% respectively.

The rand slid to R10.8120 per dollar, its weakest since July 8, according to Thomson Reuters data. By 08:43 the local unit was at R10.7875, down 0.26% from where it ended in New York on Tuesday.

Reports that Russian troops had been deployed to the Ukrainian border had dented global risk appetite, hitting emerging market currencies such as the rand, analysts said.

As a consequence of the risk-off trading environment and expectation that the European Central Bank could maintain a dovish tone at tomorrow's policy meeting, the dollar continued to enjoy broad-based strength, Barclays Africa said in a note.

"Hence, we expect the rand to remain vulnerable ... and would not be surprised if we retest July’s dollar highs of 10.84," it added.