South Africa's rand resumes plunge, stocks lower as Brexit wrongfoots risk assets

JOHANNESBURG: South Africa's rand fell as much as 3 percent against the dollar on Monday as the effects of Britain's vote to leave the European Union continued to weigh on global risk demand, while stocks also suffered.

By 1545 GMT the rand had slipped 2.45 percent to 15.4580 per dollar, erasing most of the recovery that had seen the unit close at 15.0890 in New York on Friday.

The rand had tumbled more than 8 percent early on Friday to a three-week trough of 15.6800 in the wake of the Brexit vote as investors dumped riskier emerging market currencies in favour of safe-havens like currencies such as the Japanese yen.

Bonds were steady, with the yield on the benchmark paper due in 2026 up 1.5 basis points to 9.125 percent.

Traders expect emerging market currencies like the rand to remain on the back foot as the impact of the Brexit overshadowed local events in coming weeks.

"We see potential for a continued sell-off in risky EM assets and flight to safety. As a result, we could see the rand weakening further with the USD/ZAR possibly exceeding the 15.67 resistance level," said analysts at London-based research firm 4Cast. Stocks fell more than 3 percent on Monday, extending sharp losses the second straight session.

The blue-chip JSE Top-40 index dropped 3.13 percent to 44,142 and the broader All-Share index lost 3.08 percent to 50,086.

Companies with exposure to the UK dominated the losers' list. Foschini Group, which runs Phase Eight store chain the UK, slumped 10.9 percent to 126 and investment bank and asset manager Investec skidded 9.66 percent to 84.56 rand.

Goldminers bucked the weaker trend on the bourse, tracking a higher bullion price, as uncertainty over Britain's vote pushed investors to safe haven assets.

"The contagion-related uncertainty that Brexit brings to the global economy is likely to continue to support demand for safe-haven asset classes, keeping gold prices high," said Moody's analyst Douglas Rowlings.

AngloGold Ashanti was up 5.5 percent to 269.66 rand and rival Gold Fields added 1.8 percent to 70.33 rand. Trade active with more than 325 million shares changing hands, above last year's daily average of about 296 million shares.