Rand slides as pressure mounts

Johannesburg - The rand weakened on Tuesday and bonds softened as a wave of global risk aversion nudged emerging markets lower, with local economic and political uncertainties adding to pressure on the currency.

Stocks declined as the weaker global oil price weighed on petrochemical firm Sasol and other resource shares.

By 15:50 GMT the rand traded 2% weaker at 15.1100 per dollar, extending earlier losses as a vote in parliament to remove President Jacob Zuma from office for breaching the constitution dragged on.

Bonds also succumbed to political and economic jitters, with the yield on the benchmark 2026 issue adding 12.5 basis points to 9.265%, its highest in a week.

Fixed income trader at WWC Securities Dale Forssman said the political turmoil had sapped some of the faith in the rand, while weaker oil prices weighed on sentiment towards emerging markets in general.

"The possibility of a downgrade is at the forefront of the minds of asset managers and long-term holders of these bonds," Forssman said.

The South Africa Reserve Bank (Sarb) said late on Monday that a cut in South Africa's sovereign credit rating would hit the currency hard and push up short-term interest rates.

Standard & Poor's and Fitch rate South Africa's debt just one notch above junk status as the country grapples with depressed commodity prices, political upheaval and an economy that is barely growing. Moody's has it two notches above junk, but on review for a downgrade.

On the bourse, Sasol was the biggest loser among blue chips as crude hovered near a one-month low on doubts whether oil producers can agree an output freeze to dampen a global glut.

Sasol shares declined 6% to R408.18.

"The overall market felt the pain today. Sasol I think worse that the rest due to the oil price running out of a bit of momentum and heading comfortably sub-$40 again," said Inkunzi Investments senior trader Petri Redelinghuys.

Anglo American was 5% weaker at R110 as the head of its copper business said he saw low prices for the industrial metal for the next three to five years.

The Top-40 index was 1.4% weaker at a one-month low of 45 112 points, while the All-Share index shed 1.3% to 51 226.

Trade was muted with 195 million shares changing hands, compared with last year's daily average of 296 million, according to preliminary bourse data.