JOHANNESBURG: South Africa's rand fell as much as 1 percent against the dollar on Monday, weighed down by muted appetite for riskier assets ahead of a Federal Reserve policy meeting.
Stocks were boosted by rand-hedged companies such as SABMiller and Naspers, which are less vulnerable to slumps in the local unit.
The rand slumped to 14.5475, its softest in a week according to Thomson Reuters data, and was trading down 0.8 percent weaker on the day at 14.5160 by 1508 GMT.
Government bonds fell in tandem, nudging the yield on debt maturing in 2026 4 basis points higher to 9.105 percent.
The rand had gained more than 2.5 percent against the dollar last week, breaking through key technical milestones on its way to 5-month highs before stumbling as global appetite for emerging assets eased.
Traders and analysts said emerging market currencies in general would remain vulnerable to sentiment around the Federal Reserve's policy statement and the direction of oil prices.
"The rand is ... on the back foot at the start of the new week, underperforming its EMEA peers," Bidvest Bank said in a note.
"Heading into this week's risk events, in conjunction with lower local liquidity owing to public holidays, the near term bias is tilted towards long dollar positioning."
However, the weaker rand offered some support to local equities.
Following volatile session, the benchmark Top-40 index closed up 0.17 percent to 46,582 points while the broader All-Share index rose 0.11 percent to 52,985 points.
Rand-hedged stocks, or those with operations abroad, such as Richemont, British American Tobacco and SABMiller benefit when the rand currency is weaker.
Luxury goods maker Richemont rose 1.26 percent to 95.51 rand, British American Tobacco ticked up 2.49 percent to 878 rand while beer maker SABMiller edged up 1.38 percent 887.80 rand.
The "rand hedges" are Johannesburg-listed companies that reap the bulk of their revenue outside of South Africa, making them less sensitive to weakness in the currency.
Trade was slow, coming in at around 155 million shares compared to last year's daily average of around 290 million shares. South African markets will be closed on Wednesday for a national holiday.
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