By Garth Theunissen April 16 (Bloomberg) -- The rand weakened for a second day, the biggest drop among emerging-market currencies, as gold fell and South Africa eased controls for hedging currency risk, prompting bets demand will increase for foreign exchange. The currency lost as much as 0.9 percent to 7.3798 per dollar before trading 0.7 percent lower at 7.3621 by 11:37 a.m. in Johannesburg, from a close of 7.3149 yesterday. The South African Reserve Bank approved regulations late yesterday that allow companies to enter into forward-exchange contracts for six months or less without having to provide proof of their foreign-currency needs until the contract expires, Elijah Mazibuko, head of exchange control at the central bank, said by telephone from Pretoria. Companies will also be permitted to renegotiate the terms of hedging contracts as many times as necessary within the period, said Mazibuko. “Don’t underestimate how huge this is; these changes will completely alter the way local corporates manage risk,” John Cairns, head of foreign-exchange research at Rand Merchant Bank in Johannesburg, wrote in a client note today. “The knee-jerk reaction of the markets may be to sell the rand.” Under previous regulations forward-exchange contracts between companies and banks were deemed fixed once proof of an underlying foreign-currency commitment had been supplied to the lender within the stipulated 14-day period, said Mazibuko. South Africa’s currency also weakened, falling against all its 16 most-actively traded counterparts, as prices for gold and platinum fell. The precious metals account for almost a quarter of South Africa’s export earnings, according to the Johannesburg-based Chamber of Mines. Gold Declines “Precious metals are off their recent highs,” said Ion de Vleeschauwer, chief dealer at Bidvest Bank in Johannesburg, which runs South Africa’s largest chain of moneychangers. “There’s a bit of dollar strength coming through.” Gold fell as much as 0.8 percent to $1,152 an ounce as a stronger dollar discouraged purchases of the metal as an alternative investment. Platinum dropped 0.7 percent to as low as $1,710.50 an ounce for a second day of declines. Government bonds rose to an almost seven-month high, with price of the benchmark 13.5 percent security due September 2015 rising 42 cents from yesterday’s close to 124.82 rand, the highest since Sept. 22. The gains pushed the yield on the security down 8 basis points from yesterday to 7.78 percent. To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net

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