Rand Slumps to 1-Month Low on Concern South Africa, Global Growth Slowing

The rand slid to a one-month low against the dollar on concern the global economy is faltering and on speculation a report today may show South Africa’s gross domestic product grew at a slower pace in the second quarter.

The currency declined as much as 1 percent to 7.4165 per dollar, the weakest level since July 26, before trading down 0.9 percent at 7.4140 as of 9:32 a.m. in Johannesburg, from a previous close of 7.3447.

Sales of existing U.S. homes dropped 13.4 percent in July, according to a Bloomberg survey before a National Association of Realtors report. South Africa’s GDP growth eased to 3.8 percent in the three months to June 30, from 4.6 percent in the first quarter, according to the median estimate of economists polled by Bloomberg.

“Emerging-market currencies overall have come under some pressure as there appears to be a wholesale rotation away from riskier assets,” said Marc Copeland, a Cape Town-based currency trader at Investec Asset Management, which oversees about $70 billion. “Investors are opting for the safety of the sidelines” given risks to the global economy, Copeland added.

Pretoria-based Statistics South Africa is scheduled to release the GDP report at 11:30 a.m. local time.

Slowing economic growth in South Africa is “likely to support weaker rand bias,” Standard Bank Group Ltd. analysts Michael Keenan, Nomvuyo Guma and Tebogo Mosepele wrote in a client note today.

Government bonds advanced, with South Africa’s benchmark 13.5 percent security due September 2015 adding 6 cents to 125.54 rand. The yield fell 2 basis points to 7.34 percent.

FRAs, or forward-rate agreements, showed investors increased bets the central bank will lower its key rate on Sept. 9. The cost of three-month contracts for cash in one month fell 1 basis point to 6.28 percent, 3 basis points above the record low of 6.25 percent reached on Aug. 12.

To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net

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