The rand declined for a second day versus the dollar, paring its biggest weekly gain in six, after a report showed U.S. employment stagnated in August, fueling concern the world’s biggest economy is slowing. Bonds gained.
The rand weakened as much as 1.1 percent to 7.0683 per dollar, and traded 0.9 percent down at 7.0538 as of 4:26 p.m. in Johannesburg. The currency of Africa’s biggest economy has rallied 1.4 percent versus the dollar this week, the most since the five days through July 22.
U.S. payrolls were unchanged in August, the weakest reading since September 2010, after an 85,000 gain in July that was less than initially estimated, Labor Department data showed today. The median forecast in a Bloomberg News survey called for an increase of 65,000.
“This data reinforces the view that we’re heading for a global slowdown,” Michael Keenan, an analyst at Standard Bank Group Ltd. in Johannesburg, said by phone. “Emerging-market exports will be under threat. We’re seeing a move back to safe havens, out of risky assets.”
Emerging-market stocks fell the first time in six days, and South Africa’s benchmark stock index slumped more than 2 percent, led by raw materials exporters including BHP Billiton Ltd. and Anglo American Plc. Gold soared the most in four weeks and U.S. Treasuries rallied.
Concern that weak demand in the U.S. may dim South Africa’s export prospects outweighed speculation the data will persuade the U.S. Federal Reserve to start a new round of monetary easing, Keenan said. Two earlier rounds of bond-buying by the Fed boosted demand for rand assets.
“Even though these poor figures heighten the risk that the Fed may introduce additional monetary easing, investors will be concerned that underlying demand is very weak,” Keenan said. “If underlying demand is weak, emerging-markets exports will be under threat and you can’t be too bullish about risky assets.”
If the rand breaches 7.07 per dollar today, it may weaken to 7.17, Keenan said.
Bonds gained, with four-year yields falling to a record as investors increased bets the central bank will reduce rates as soon as November.
The 13.5 percent notes due 2015 climbed 15 cents to 124.909 rand, driving the yield down four basis points 6.382 percent. The yield fell as low as 6.305 percent. The yield on the 6.75 percent securities declined seven basis points to 7.706 percent.
Investors increased rate-cut bets, with forward-rate agreements starting in February retreating six basis points, or 0.06 percentage points to 5.17 percent, the lowest on record.
The central bank will act “appropriately” to a significant slowdown in the global economy, Reserve Bank Governor Gill Marcus said on Aug. 23. An Aug. 30 report showed South Africa’s economy grew an annualized 1.3 percent in the second quarter, its slowest pace in almost two years, as manufacturing and mining output plunged.
The Reserve Bank has kept its benchmark interest rate unchanged at 5.5 percent this year to help boost the recovery in the nation’s economy, even as price pressures increased.