Rand Down as Copper Declines on Signs of Slowing Chinese Demand
The rand fell for a second day as commodities including copper fell on signs of slowing demand from China, the world’s biggest user of industrial metals, putting pressure on currencies of commodity producers.
South Africa’s currency slid 0.4 percent to 7.6314 per dollar as of 8:37 a.m. in Johannesburg, the worst performer of 16 major currencies monitored by Bloomberg. The currencies of Australia, New Zealand and Canada also weakened. The yield on 8.25 percent bonds due 2017 rose two basis points to 7.415 percent.
China’s copper demand based on trade data climbed 26 percent in January and February from a year earlier, down from 30 percent growth in December, Standard Chartered Plc said in a report yesterday. Chinese demand may increase this year at the slowest pace since the 2008 financial crisis, Wei Jianghong, chairman of Tongling Nonferrous Metals Group Co., said this month. Premier Wen Jiabao set a 2012 economic growth target of 7.5 percent this month, compared with an 8 percent goal over the past seven years.
“The rand wouldn’t be quite as sensitive to that news as the Aussie and the Kiwi, but it would warrant a bit of rand weakness,” John Cairns, a currency strategist at Johannesburg- based Rand Merchant Bank, said by phone.
Copper for three-month delivery fell as much as 0.9 percent, its first decline in four days. Commodities including metals account for 64 percent of South Africa’s exports, according to government data. The nation has the world’s biggest reserves of platinum, manganese and chrome.
Earlier, Reuters reported that South Africa’s Government Employees’ Pension Fund may invest about $22 billion of the $150 billion it manages outside the country, citing actuarial head John Oliphant. That may add to rand weakness, Cairns said.
“There is little indication of how much of the additional investment has already been done and how quickly the diversification into foreign assets will take place,” he said in a separate note to clients.
The rand has advanced 6 percent this year, heading for its best first quarter since 2004. It declined 18 percent last year, the second-worst performance by an emerging-market currency after Turkey’s lira.
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