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Rand breaches R16/$ in emerging market selloff

Jan 07 2016 10:00

Johannesburg - The rand fell nearly 1% against the dollar on Thursday, sliding towards December's record lows as renewed concerns about China's economy spurred an emerging market selloff.

The rand was also victim to South Africa's weak economic fundamentals, with a survey this week showing private sector activity shrank at a faster pace in December, with output dropping.

READ: SA private sector remains in doldrums, PMI shows

At 09:04, the rand traded at R15.9555 to the greenback, down 0.65% from Wednesday's close in New York.

It had fallen to 16.0050 earlier in the session, close to the all-time low of 16.0485, reached in mid-December after President Jacob Zuma fired finance minister Nhlanhla Nene.

Thursday's move largely reflected a retreat in emerging Asian currencies as China accelerated the yuan's depreciation, heightening concerns over the world's second-largest economy.

The bourse was not spared the selloff, with the Top 40 and broader All-share indices each dropping 2% soon after the market opened at 09:00.

"There seems to be an awful lot of pessimism surrounding financial markets at the moment," Standard Bank trader Warrick Butler said.

Government bonds followed the weak trend, with the yield on South Africa's benchmark 2026 issue adding 2.5 basis points to 9.58%.

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