Rand Retreat Triggers Record Currency Futures Trading

The plunging rand drove currency futures trading on South Africa’s exchange to a record this month amid bets for further depreciation.

Trading rose to 40 billion rand ($3.9 billion) this month, the most ever, Warren Geers, the JSE Ltd. (JSE)’s general manager for bonds and financial derivatives, said in an e-mailed response to questions today. The amount this year has jumped to 133 billion rand ($13.1 billion) from 125 billion rand for all of 2012, he said.

The rand plummeted for a sixth day, extending the worst retreat among 16 major currencies tracked by Bloomberg, sliding 17 percent this year to 10.1944 per dollar. Futures contracts signal investors expect further declines, with generic three-month rand contracts trading at 10.4468 per dollar.

“We’re having our best year ever,” Graham Smales, the JSE’s director for bonds and derivatives, said in an interview yesterday. “The fundamental thing that is driving that is currency volatility.”

South African President Jacob Zuma sought to calm investor concern over falling exports from the continent’s largest economy amid labor unrest at mines. Zuma asked Deputy President Kgalema Motlanthe, Finance Minister Pravin Gordhan and cabinet members responsible for labor and mines to intervene in the feud between the National Union of Mineworkers and the Association of Mineworkers and Construction Union.

The rand was 1.5 percent lower against the dollar as of 2:03 p.m. in Johannesburg. JSE’s stock climbed 1.1 percent today, extending a 3.8 percent advance this week.

To contact the reporter on this story: Jaco Visser in Johannesburg at avisser3@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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