The rand retreated to the lowest in almost three weeks and yields rose after French socialist Francois Hollande was elected president and Greek voters picked anti-bailout parties, limiting investor appetite for risk.
South Africa’s currency depreciated as much as 0.8 percent to 7.8914, the weakest since April 17, and traded at 7.8393 by 3:36 p.m. in Johannesburg. The yield on the nation’s 6.75 percent bonds due 2021 climbed six basis points, or 0.06 percentage point, to 7.60 percent.
Hollande, the first Socialist in 17 years to control Europe’s second-biggest economy, pledged to push for less austerity. The new Greek parliament will have three new anti-bailout parties represented, fueling concern deficit-reduction efforts in Europe may be derailed. The euro region buys 22 percent of South Africa’s exports.
“It is likely that in the day ahead we see local bonds and equities both come under pressure as more uncertainty and elevated risk is priced in,” George Glynos, an economist at Johannesburg-based ETM Analytics, wrote in e-mailed comments today. “Emerging market currencies will find themselves on the defensive and the rand has already begun to reflect exactly this.”
The Standard & Poor’s GSCI Index fell for a fourth day, all but erasing this year’s gains, and an index of global emerging-market stocks declined to the lowest level since January. South Africa’s benchmark stock index declined for a third day as commodity exporters including Anglo American Plc and BHP Billiton Ltd. fell.
Metals and other commodities account for 45 percent of South Africa’s exports, according to government data.
The euro declined as much as 1 percent to $1.2955 per dollar, the lowest since Jan. 25 on an intraday basis. The rand often moves in tandem with the euro against the dollar, with a statistical correlation of 0.60 over the past year, according to data compiled by Bloomberg. A value of one would mean they moved in lockstep.
The rand pared its decline after German factory orders rose more than economists forecast in March, providing evidence Europe’s largest economy is weathering the debt crisis.
The yield on South Africa’s $1.5 billion of 4.665 percent coupon bonds due 2024 dropped 26 basis points, or 0.26 percentage point, to 4.10 percent, narrowing the premium over U.S. Treasuries by 10 basis points to 220 basis points.