JOHANNESBURG: South Africa's rand fell to a 2-1/2 month low against the dollar on Tuesday as investors dumped riskier emerging market assets for safer-haven currencies such as the Japanese yen, owing to a weak global economic outlook.
The rand led the list of losers against the U.S dollar in 20 emerging market currencies tracked by Thomson Reuters.
It hit 8.0015 against the greenback at 1400 GMT, a level last seen on January 23, a loss of 1.40 percent on Monday's close of 7.8875, according to Reuters' data.
"We have seen some of the commodity prices not doing particularly well on the day," said George Glynos, managing director at financial consultancy ETM.
"I think that weighs particularly well, the rand is getting hit and I suspect there is thin liquidity issues at play as well," Glynos said.
Traders are slowly returning back to their desks after the four day Easter weekend, which is exaggerating the moves in the local currency market.
Also important for South Africa, China's trade numbers overall reinforced the view of a soft landing for the world's second largest economy, seen as disappointing for local commodity exporters.
To top things off, the International Monetary Fund (IMF) came out with stern a warning for emerging and developing economies late in the South African afternoon.
The IMF said if downside risks to global economic growth materialize, there could be even greater challenges facing commodity exporters such as South Africa.
But government bonds firmed, with investors still seeing value there.
The yields on the benchmark three-year paper fell three basis points to 6.79 percent and the longer-dated issue due in 2026 dropped 1.5 basis points to 8.535 percent.
Comments
Comments are closed for this article.