South African rand slumps to 3-month low as Turkey turmoil hits emerging markets

JOHANNESBURG: South Africa's rand tumbled to its weakest since early January on Wednesday, as sentiment toward emerging market currencies was soured by a slide in the Turkish lira.

At 1515 GMT, the rand was 1.32 percent weaker at 14.6000 per dollar from an opening level of 14.4100. It earlier touched 14.6675, the softest since Jan. 3 and breaching a technical level that analysts say could see a move to 15.00.

On Monday, the Turkish lira suffered biggest one-day fall since August as local investors stepped-up conversion of savings into dollars. The lira continued to weaken on Wednesday, plunging around 2 percent, while government directed banks to withhold lira liquidity from a key foreign market.

"The rand has become an after-thought in emerging markets as the focus has been on the absolute mess in Turkey where overnight rates moved to almost 380 percent," said chief trader at Standard Bank Warrick Butler.

With key resistance at 14.60 breached and local sentiment subdued by signs of slow economic growth and concerns that Moody's may cut the sovereign rating to junk on Friday, the rand is set to remain on the ropes for the next few sessions.

Bonds eked out some gains, with the yield on the benchmark government bond due in 2026 down 1.5 basis points to 8.725 percent.

On the bourse, stocks ended higher with the benchmark JSE Top-40 index up 1 percent at 49,897.32 rand and the broader All share index adding 0.9 percent to 56,149.