BLBG:Rand Heads for Six-Week Low as Commodities Fall on Europe Crisis
The rand declined to its lowest in more than six weeks as a surge in Italian bond yields stoked speculation Europe may fail to contain its debt crisis, hurting demand for commodities and riskier assets.
South Africa’s currency retreated 0.7 percent to 8.2276 per dollar by 8:25 a.m. in Johannesburg, the second-worst performer against the dollar among more than 20 emerging-market currencies tracked by Bloomberg. A close at that level would be the worst since Oct. 4. Copper fell for a second day, dropping as much as 1.3 percent to $7,588.75 a metric ton.
Italy’s 10-year bond yields rose above 7 percent yesterday, a threshold that led Greece, Ireland and Portugal to seek bailouts, while Spain and Belgium sold less than planned at debt auctions. The extra yield investors demand to hold 10-year bonds from France, Belgium, Spain and Austria instead of German bunds all climbed to euro-era records.
“The optimism seen earlier in the week that the change in governments in Italy and Greece would ensure a return to fiscal health seems to have evaporated, along with appetite for risky assets,” Michael Keenan, a Johannesburg-based analyst at Standard Bank Group Ltd., and colleagues wrote in e-mailed comments. “The rand, as ever, remains vulnerable to negative sentiment, which spells further depreciation.”
To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
