Rand Weakens First Day in Three as Stocks, Metal Prices Decline

June 14 (Bloomberg) -- The rand weakened for the first time in three days as metal prices and stocks fell after Spain’s borrowing costs rose, fueling concern the euro-area debt crisis is worsening.

South Africa’s currency depreciated 0.2 percent to 8.4119 per dollar as of 4:28 p.m. in Johannesburg. Yields on the nation’s 6.75 percent bonds due 2021 fell five basis points, or 0.05 percentage point, to 7.56 percent.

Spain’s borrowing costs rose to a euro-era record today after its credit rating was lowered three steps to Baa3 by Moody’s Investors Service yesterday. Greece holds elections this weekend that may determine whether it stays in the euro zone. The euro area is South Africa’s biggest regional trading partner, buying a fifth of the nation’s exports.

“Risk aversion remains the order of the day ahead of the much-anticipated Greek election,” Nomvuyo Guma, a currency strategist at Standard Bank Group Ltd. in Johannesburg, said in e-mailed comments.

A benchmark index of emerging-market stocks declined as much as 0.8 percent. South Africa’s benchmark stock index dropped as much as 1.1 percent, led by commodity exporters including Anglo American Plc and BHP Billiton Ltd, as the prices of metals including copper fell.

The rand stayed weaker after more Americans than forecast applied for unemployment insurance payments last week, and consumer prices in the world’s biggest economy fell by the most in more than three years.

With the U.S. economy slowing and inflation cooling, the Federal Reserve may have more flexibility to take further action to bolster growth. The rand may pare its decline if stimulus measures boost riskier assets, Guma said.

To contact the reporter responsible for this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net