Rand Futures Trading Doubles in August as Currency Slides

Rand futures trading more than doubled in August as the exchange rate against the dollar slid 4.1 percent in the month, adding to the worst performance among major currencies this year.

Trading in futures contracts climbed to 23.3 billion rand ($2.2 billion) from 11.5 billion rand in July, according to data e-mailed by the Johannesburg Stock Exchange. The value of contracts is more than four times higher than a year earlier.

South Africa’s currency has depreciated 18 percent against the dollar this year, the most among major peers monitored by Bloomberg. The rand traded at 9.8768 per dollar on July 31 and weakened to a 4 1/2-year intraday-low of 10.5096 per dollar on Aug. 28.

“You will always have demand for futures contracts while the rand is weakening,” Ion de Vleeschauwer, the Johannesburg-based chief dealer at Bidvest Bank, said by phone. “Investors panicked in August and hedged their exposure.”

Open interest, or outstanding contracts, for all currencies and all durations rose to 1.2 million by Aug. 31, according to the JSE data. Futures contracts worth 158 billion rand were traded through Aug. 31, compared with 72.2 billion rand during the same period a year earlier.

The rand weakened 0.4 percent to 10.3288 per dollar by 2:31 p.m. in Johannesburg. The generic three-month rand contracts added 0.3 percent to 10.5450 per dollar yesterday, signaling investors expect further depreciation.

Before it's here, it's on the Bloomberg Terminal.