Rand follows metal prices downward

THE RAND fell to its lowest level in a week yesterday as metal prices tumbled after reports signalled economies in Europe and Asia were slowing, fuelling concern that export prospects will deteriorate.

The rand retreated as much as 1.3 percent to R8.3835 a dollar, before paring its decline, after the Reserve Bank left its benchmark lending rate unchanged. By 5pm, it was bid at R8.3293, 7.52c weaker than on Wednesday at the same time.

Yields on 6.75 percent bonds due in 2021 rose for the first time in four days.

The Reserve Bank revised its growth forecasts down, saying it is concerned about global risks to the domestic economy.

Euro-area services and manufacturing output fell to a 39month low in September and China’s manufacturing probably contracted for an 11th month, according to data from Markit Economics and HSBC.

Japan’s exports slid for a third month in August, the Finance Ministry said.

More Americans than forecast filed applications for unemployment benefits last week, the Labour Department said.

“There is no way our exports are going to pick up if the world’s leading economies are in decline,” Ian Cruickshanks, the head of strategic research at Nedbank, said. “That is quite worrying for the outlook for the rand exchange rate.”

The interest rate was left unchanged at 5 percent.