South Africa Rand Weakens to Extend Worst Annual Drop in 5 Years

The rand, the worst performer among major currencies against the dollar this year, weakened to extend the biggest annual slide since 2008 after a report that showed an expansion in South African money supply slowed.

Growth in the broadest measure of money in circulation in Africa’s largest economy decelerated to 6.3 percent in November from 7.1 percent a month earlier, the Pretoria-based South African Reserve Bank said. That’s the slowest pace since December 2012 and lower than the 6.9 percent median estimate of seven economists in a Bloomberg survey. Private sector credit extension slowed to 6.98 percent from 7.62 percent.

The data are “consistent with the picture of an economy with subdued economic momentum,” Peter Worthington, an economist at Barclays Plc’s Absa Capital unit in Johannesburg, said in an e-mailed note. The government is forecasting growth of 2.1 percent this year, the slowest since the 2009 recession, while the central bank has kept interest rates at the lowest level in more than three decades to stimulate the economy.

The rand weakened 0.6 percent to 10.4797 per dollar as of 10:54 a.m. in Johannesburg. The currency has dropped 19 percent, the worst performer among 16 major currencies tracked by Bloomberg. The yield on benchmark government bonds due December 2026 fell one basis point, or 0.01 percentage point, to 8.26 percent, compared with 7.29 percent at the end of 2012.

“There are very little volumes in bonds and foreign exchange today,” Thando Vokwana, a fixed-income trader at FirstRand Ltd.’s Rand Merchant Bank unit, said by phone from Johannesburg. “It’s going to be a very quiet day” with South African financial markets closing at around noon, he said.

Foreign investors sold a net 340 million rand ($32 million) of bonds yesterday and bought a net 522 million rand of equities, data from the nation’s bourse show. Foreigners sold a net 385 million rand of shares this year and bought 25.7 billion rand of bonds, compared with debt purchases in 2012 of 93.52 billion rand, according to the Johannesburg Stock Exchange.

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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