Rand retreats, MTN weighs on the bourse

THE RAND tumbled to its weakest in more than a week yesterday as financial crises in Turkey and Argentina rattled sentiment toward emerging markets and stoked another wave of selling on the local currency.

At 5pm, the rand bid at R14.6767 to the dollar, 27 cents weaker than at the same time on Wednesday, its weakest since August 20.

“The entire EM (emerging markets) is a sea of red,” said currency trader at Rand Merchant Bank, Jan Sluis-Cremer.

“The rand’s being dragged down by other emerging markets. We saw Argentina implode overnight and that’s sparked some selling across the board and it seems like the rand is being used as a proxy hedge,” said Sluis-Cremer.

The Argentine peso crashed over 7 percent after a investor confidence there collapsed following its request to the International Monetary Fund to speed up disbursement of a $50 billion (about R716.4bn) loan programme.

Sentiment towards emerging markets was also hurt by Turkey’s ongoing financial crisis, and the lira was amongst the hardest hit by the fresh bout of investor nervousness, diving to a two-week trough.

Concerns over the health of the domestic economy also put pressure on the currency. South Africa’s budget deficit in July increased to R95.98bn from R92.21 shortfall a year ago, Treasury data showed.

Government bonds also weakened, with the yield on the benchmark paper due 2026 up 10 basis points to 9.04 percent.

Meanwhile, stocks dropped as MTN slid as much as 23percent after Nigerian authorities ordered the South African telecoms group to return $8.1bn.

The mobile operator closed 19.41 percent lower at R86.50.

Nigeria’s central bank said $8.1bn had been illegally moved abroad because the company’s bankers, who include South Africans Standard Bank’s Nigerian unit Stanbic, had failed to verify that Africa’s biggest telecoms company had met all the foreign exchange regulations.

Standard Bank denied any wrongdoing. Its shares fell 2.39 percent to R185.

The JSE Top40 index was down 2.55 percent to 52 650.2 points while the broader all share index slipped 2.27 percent to end the session at 58 802.69 points.