Rand Retreats on Greece Aid Concern, Central Bank Announcement

The rand headed for its first weekly drop in five as the central bank said it will make an announcement “of national importance” tomorrow and commodities fell after European leaders held back a Greek rescue package.

South Africa’s currency retreated 1.9 percent to 7.7317 per dollar as of 4:17 p.m. in Johannesburg, bringing its decline this week to 2.7 percent, the most since the five days ended Dec. 16. It was the worst performer today out of more than 20 emerging-market currencies monitored by Bloomberg. Against the euro, it slipped 1.1 percent to 10.1861.

Governor Gill Marcus, who is three years into a five-year term, will make the announcement tomorrow at 3 p.m. local time, together with President Jacob Zuma and Finance Minister Pravin Gordhan, the Pretoria-based Reserve Bank said on its website, without giving further details.

“They’re doing it on a Saturday, so it is probably something potentially market-moving,” Michael Keenan, an analyst at Absa Group Ltd. in Johannesburg, said by phone. “The rand is definitely on the back foot as a result of this.”

The rand retreated along with stocks and commodities after European leaders held back a rescue package for Greece. Greek Finance Minister Evangelos Venizelos said his euro-area counterparts refused to approve a 130 billion-euro ($171 billion) aid package because the government fell short of austerity demands. George Karatzaferis, who heads one of three parties supporting interim Prime Minister Licas Papademos, said he couldn’t back an accord on cuts in its present form.

‘Risk-Off’

“There will be talk of a general change in tone back towards risk-off and profit taking,” George Glynos, an economist at Johannesburg-based ETM Analytics, wrote in e-mailed comments today. “Given the on-going drama in Greece, this could very well keep the rand on the defensive for a little while longer.”

Standard & Poor’s GSCI Index of commodities fell for the first time in six days and a gauge of emerging-market stocks slipped the most this year on a closing basis. Commodities account for about 60 percent of South Africa’s exports, according to government data.

South African bonds declined on concern the state-owned transport company’s plan to spend 300 billion rand upgrading its rail network will add to supply in the market. Transnet SOC Ltd. will tap international and domestic bond markets, the South African Press Association reported, citing Public Enterprises Minister Malusi Gigaba.

The yield on 6.75 percent bonds due 2021 gained three basis points, or 0.03 percentage points, to 7.89 percent, the highest on a closing basis since Jan. 23. The yield has climbed 21 basis points this week, the most since the five days ending Sept. 23.

“Concern about government debt remains elevated,” Carmen Nel and Mamello Matikinca, analysts at Rand Merchant Bank in Johannesburg, said in an e-mailed research note.

To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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