Rand plunges on US jobs data ex­pec­ta­tions

Weekend Argus (Saturday Edition) - - BUSINESS -

THE RAND fell by 1 per­cent against the dol­lar yes­ter­day as US jobs data sparked ex­pec­ta­tions that the Fed­eral Re­serve will cut back on as­set pur­chases that have fed bil­lions of dol­lars into high-yield­ing emerg­ing mar­kets.

Govern­ment bonds weak­ened, push­ing yields to multi-week highs across the curve.

The bench­mark R186 bond ma­tur­ing in 2026 leaped 18.5 ba­sis points to 8.265 per­cent and the shorter-dated 2015 bond climbed 12 ba­sis points to 6.135 per­cent.

The rand closed 0.75 per­cent weaker at 10.3650/dol­lar af­ter ear­lier plumb­ing a ses­sion low of 10.4050, its weak­est in 11 weeks.

“Dol­lar/rand got kicked higher fol­low­ing much bet­ter than ex­pected US non-farm pay­rolls,” said 4Cast emerg­ing mar­ket an­a­lyst Anisha Arora. “Dol­lar/ rand up­side re­mains vul­ner­a­ble, with the psy­cho­log­i­cal 10.50 the key level to watch.”

A scale-back of the U.S. Fed­eral Re­serve’s $85 bil­lion-a-month bond pur­chases would be detri­men­tal for the rand given South Africa’s heavy reliance on for­eign port­fo­lio flows to help plug a cur­rent ac­count deficit.

The do­mes­tic news has also been neg­a­tive for the rand, which has fallen more than 22 per­cent against the green­back this year, weighed down by strikes. – Reuters

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