South African Rand Drops Second Day Amid U.S. Debt Deal Optimism

South Africa’s rand weakened for a second day amid optimism that lawmakers will reach a deal on raising the U.S. debt limit and before data that may add to evidence of slowing growth in Africa’s largest economy.

The rand was the fourth-worst performer against the dollar among a basket of emerging-market currencies tracked by Bloomberg today. A gauge of foreign-exchange volatility fell to an eight-month low as traders waited for a resolution to the impasse that shut parts of the U.S. government. Retail sales in South Africa increased at the slowest pace in 3 1/2 years in August, a report may show tomorrow.

“There is talk that U.S. lawmakers will come to an agreement on the debt ceiling soon, which is supporting the dollar,” Ion de Vleeschauwer, chief dealer at Bidvest Bank, said by phone from Johannesburg.

The rand declined 0.4 percent to 9.9584 per dollar as of 4:23 p.m. in Johannesburg after gaining as much as 0.3 percent and depreciating as much as 0.5 percent. Yields on benchmark 10.5 percent bonds due December 2026 were unchanged at 7.92 percent after climbing six basis points yesterday.

South African retail-sales growth slowed to 1.1 percent in August, from 2.8 percent the previous month, a report may show this week, according to the median estimate of 12 economists in a Bloomberg survey. Growth at that rate would be the slowest since February 2010, according to data compiled by Bloomberg.

Foreign investors bought a net 12 million rand ($1.2 million) of South African bonds yesterday, while selling 644 million rand of equities, according to JSE Ltd. data.

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