South Africa's rand at new lows, stocks slide

JOHANNESBURG: South Africa's main stock index tumbled and the rand hit a fresh 2-1/2 week low against the dollar after a sharp fall the day before on the back of a global rout of stocks, as fears mounted of the global economy sliding back into recession.

The Top-40 blue-chip index was down nearly 3 percent in early trade while government bonds extended Thursday's gains to multi-month highs, with some traders suggesting investors viewed local debt as relatively safe given the current global turmoil.

The rand hit a session low of 6.96 earlier on Friday before coming back to 6.9510 by 0715 GMT after ending Thursday's session in New York at 6.9480.

The rand took a 3 percent tumble against the greenback on Thursday, falling alongside stocks as investors fretted about the health of the global economy.

"The rand was one of the worst performers on Thursday ... Dollar/rand is likely to continue to edge higher, although it faces resistances around the 7.02-7.05 area," BNP Paribas said in a note.

Government bonds however strengthened, with the yield on the four year bond falling to a new 9-month low of 7.0 percent on Friday. It was last at 7.045 percent, down 8.5 basis points on the day.

The yield on the 2026 issue shed 8 basis points to 8.05 percent.

Strong foreign flows into the bond market in recent weeks have helped cushion the rand's fall and allowed the Reserve Bank to accumulate foreign exchange.

Date on Friday showed net gold and foreign exchange reserves rose to $47.87 billion at the end of July from $47.162 billion in June.

Copyright Reuters, 2011