Share

Weak GDP drags rand to fresh 4-year lows

Johannesburg - The rand plunged to a fresh 4-year low against the dollar for the second straight session on Wednesday, dragging bond yields to over one-month highs as poor investor sentiment weighed.

Weaker-than-expected economic growth data in the previous session saw the rand sell off heavily. Expectations that the US Federal Reserve will scale back quantitative easing added to the currency's woes.

Emerging market currencies trading against the dollar have weakened on the likelihood that inflows fuelled by the Fed's stimulus programme could dry up.

The local currency fell to R9.8600/$, its weakest in over four years.

Analysts say the rand's fall through R9.80 opens up the door for a fall all the way through R10.0/$. In the meantime, support is seen in the R9.87 region.

Bond yields have trekked higher with the weaker currency.

"Bonds are under major pressure given what's happened with the currency and given what's happened with global market yields," said Richard Farber, bond trader at World Wide Capital Securities.   

The yield on the 2026 benchmark issue climbed 14 basis point to 7.325% while that on the shorter-dated 2015 issue added 9 basis points to 5.35%.

"We still favour the front end of the curve. We think that that shows a lot of value given the GDP number from yesterday. We are not inclined to be aggressive buyers but we do think that there will be buyers around," Farber added.

Treasury will announce bond issuance plans for next week at 11:00.
We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,221.35
+1.2%
Silver
24.87
+0.9%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders