S.Africa's rand falls to weakest level in nine weeks - CNBC Africa

S.Africa's rand falls to weakest level in nine weeks

Financial

by Reuters 0

South Africa's rand falls to weakest level in nine weeks.

This slump occured as electricity constraints met U.S. payrolls data to push it through key support levels.

(READ MORE: Why the S.African rand is undervalued)

The rand was under pressure most of the session, with South African electricity company Eskom imposing the biggest power cuts in 9 months as it tries to avoid a collapse of the grid.

The currency extended losses in the afternoon as the dollar rallied to fresh multi-year highs after stronger-than-expected jobs data from the United States.

South Africa's currency was sold to 11.3770/dollar levels, giving up 1.6 per cent to its weakest since Oct.3. It was the biggest loser in a basket of emerging market currencies trading against the dollar and tracked by Reuters.

"Non-farm payrolls are the main reason we're up higher today," said Ian Martin, a currency trader at Rand Merchant Bank.

"There's not much going for the rand at the moment. There's the bad current account deficit, commodity prices are lower and the euro is slowing down. Generally the rand is under pressure and I would imagine it's going to remain so for the rest of the year," Martin added.

Year-end has traditionally been supportive for the rand, and dealers expect that could provide some cushioning for the currency.

(READ MORE: South’s rand holds steady vs dollar, focus on ECB policy)

Yields on government bonds rose to more than one-week highs as they tracked the weaker currency. The yield on the benchmark 2026 bond climbed 4.5 basis points to 7.77 per cent.

South Africa is releasing third quarter current account data on Monday, which is likely to add to market volatility and encourage rand bears.

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