The rand weakened against the dollar as Europe’s worsening debt crisis prompted investors to sell developing-nation assets and China’s reserve-requirement increase damped the global economic outlook. The rand slipped as much as 0.9 percent to 6.8603 per dollar, and traded 0.6 percent weaker at 6.8417 as of 11:09 a.m. in Johannesburg. It fluctuated against the euro, trading 0.1 percent stronger at 9.8037 per euro after weakening as much as 0.4 percent earlier. Investors are shunning risk amid speculation Greece will be unable to avoid a default and Finland won’t support Europe’s bailout of Portugal. The People’s Bank of China increased lenders’ reserve requirements from April 21 and said monetary tightening will continue for “some time”. Bigger reserves may slow growth in the world’s second-largest economy. “Continued noise about Greek debt restructuring as well as the reserve requirement hike in China over the weekend have dented risk sentiment,” BNP Paribas SA analysts led by London- based Paul Mortimer-Lee wrote in an e-mailed research note. Slowing growth in China may damp demand for South Africa’s commodity exports, reducing the appeal of the rand. China is the biggest buyer of South African raw materials, according to department of trade and industry data. South Africa’s release of inflation data on April 20 may give investors an indication of the pressure the central bank will face to lift interest rates. The Consumer Price Index probably advanced 4 percent from a year ago in March, compared with 3.7 percent the month before, according to the median estimate of 21 economists surveyed by Bloomberg. Bonds “We expect significant acceleration compared to the previous month, which should reverse the short-term slide of the rand,” the BNP Paribas analysts wrote. South African government bonds fell, snapping two days of gains. The 13.5 percent notes due 2015 dropped 12 cents to 121.28 rand, boosting the yield 3 basis points to 7.70 percent. The inflation report means “there will be some event risk” for bond investors, Seamus Vasey, a Johannesburg-based analyst at Standard Bank Group Ltd., wrote in a research note. To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net To contact the editors responsible for this story: Gavin Serkin at gserkin@bloomberg.net.

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