BLBG:Rand Declines As Euro Weakens, Commodities Fall Ahead Of G7 Call
The rand declined, reversing an earlier gain, as the dollar strengthened against the euro ahead of a meeting of global policy makers on Europe’s debt crisis, weakening the prices for commodities.
South Africa’s currency retreated less than 0.1 percent to 8.5045 per dollar as of 12:29 p.m. in Johannesburg after strengthening as much as 0.8 percent in earlier trading. Yields on the nation’s 6.75 percent bonds due 2021 declined one basis point to 7.75 percent.
Finance ministers and central bank governors from Group of Seven countries plan to hold a call today to discuss risks to the global economy posed by a further deterioration in Spain’s banking industry and a possible Greek departure from the 17- member euro area. The dollar rose against a six-currency basket including the euro, gaining for the first time in three days.
“It is unclear what exactly is expected to come from the meeting, except more criticism and pressure being heaped on the Eurozone politicians,” John Cairns and Josina Solomons, Johannesburg-based analysts at Rand Merchant Bank, said in e- mailed comments. “Commodity markets are certainly unimpressed. Unlike other markets, speculators are probably still long, hence there isn’t the unwinding of shorts to generate the bounce.”
Standard & Poor’s GSCI Index of commodities declined as much as 0.4 percent. Metals and other commodities account for 45 percent of South Africa’s exports, according to government data. The rand often tracks the euro, the currency of its largest regional trading partner, accounting for 22 percent of the nation’s exports.
G-7 members are “concerned about the unstable situation in the current global economy and we need to share these concerns,” Japanese Finance Minister Jun Azumi told reporters in Tokyo. Canadian Finance Minister Jim Flaherty said yesterday in Ottawa that officials would discuss “the situation in Europe,” without elaborating about the call.
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
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