Rand Retreats First Day in Three as Metals Fall on France Rating

The rand declined for the first time in three days as metal prices dropped amid concern a credit-rating cut for France signals a worsening economic outlook for the euro-area, South Africa’s biggest regional trading partner.

The rand retreated as much as 0.7 percent and traded 0.4 percent lower at 8.8647 a dollar as of 5:22 p.m. in Johannesburg. Yields on the nation’s benchmark 10.5 percent bonds due Dec. 2026 dropped six basis points, or 0.06 percentage point, to 7.57 percent.

France lost its top credit rating at Moody’s Investors Service, which also maintained a negative outlook for Europe’s second-largest economy, citing what it called a worsening growth outlook. The euro area bought 21 percent of South Africa’s exports in the first eight months of 2012, according to government data.

Some risky assets “including the rand are languishing,’' John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments.

Moody’s downgraded France to Aa1 from Aaa and maintained a negative outlook. The downgrade followed one by Standard & Poor’s in January. The S&P GSCI index of raw materials dropped 0.2 percent today.

Metals and other commodities accounted for 45 percent of South Africa’s exports in 2011, according to government data.

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