News Column

Sell-off drives rand back towards R11

February 20, 2014

At 5pm yesterday, the local currency was bid at R10.9298 to the dollar, 4.23c weaker than on Tuesday at the same time.

Investor sentiment towards emerging markets soured, with political turmoil in Ukraine putting pressure on already vulnerable currencies such as Turkey's lira and the rand.

The rand found little relief from higher-than-expected inflation data, which showed consumer prices in the country rising at their fastest rate in four months and very near the upper end of the central bank's target range of between 3 percent and 6 percent.

Analysts have said the soft rand would drive the consumer price basket past 6 percent in a few months.

"The central bank used the likely pass-through effect of the weak rand on consumer prices to justify its surprise decision to hike interest rates in January," Shilan Shah, an economist at Capital Economics, said in a research note. "A further rise in coming months means more rate hikes are now on the cards."

The yield on the benchmark R186 bond, due in 2026, was unchanged at 8.58 percent. The yield on the shorter-dated R157 bond rose 6 basis points to 7.2 percent.

Pretoria News

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Source: Pretoria News (South Africa)

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