The rand weakened to the lowest in a week and three-year yields reached the highest in more than a month after China lowered its growth target, damping prospects for South Africa’s commodity exports.
South Africa’s currency depreciated as much as 0.9 percent and traded 0.4 percent weaker at 7.5530 against the dollar as of 3:26 p.m. in Johannesburg. The yield on the nation’s 65 billion rand of 13.5 percent bonds due 2015 climbed two basis points, or 0.02 percentage point, to 6.69 percent, the highest since Jan. 20.
Prices of metals including copper, gold and platinum fell after Chinese Premier Wen Jiabao pared the nation’s economic growth target to 7.5 percent from an 8 percent goal in place since 2005. China is the biggest buyer of South African raw materials including metals, according to government data for 2011.
China’s growth outlook “is keeping a lid on rand strength,” Nomvuyo Guma, a Johannesburg-based currency strategist at Standard Bank Group Ltd., said in e-mailed comments. “The growing global uncertainty is likely to keep proceedings somewhat subdued. We see the rand’s current levels as unsustainable” given the outlook for growth, she added.
Raw materials including metals account for 65 percent of South Africa’s exports. The currencies of other commodity-exporting countries such as Australia and Canada also declined today. South Africa’s benchmark stock index slipped for a second day, led by metal exporters including BHP Billiton Ltd. and Anglo American Plc.
The yield on the nation’s $1.5 billion of 4.665 percent notes due 2024 dropped five basis points to 4.14 percent. The extra yield investors demand to hold the debt rather than U.S. Treasuries narrowed 6.5 basis points to 214 basis points.