Dollar Declines Against Aussie to Rand as China Risks Subside

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  • Relief rally across global equities boosts risk-taking
  • Global currency volatility reaches highest since February

The dollar weakened, with its biggest losses against the currencies of commodity-exporting countries such as South Africa and Australia, as a rebound in Chinese stocks boosts investors’ risk-taking appetites.

A gauge of commodities prices that lost 1 percent last week rose 1 percent on Tuesday, supporting currencies of countries such as Australia that ship raw materials abroad. Chinese stock markets rebounded, even as the nation reported that exports declined in August. That helped push a measure of foreign-exchange volatility to its highest level in almost seven months.

"It almost feels like you’re seeing some reversal of the positions some investors had taken a couple weeks ago in a panic where they were short a lot of the commodities currencies," Charles St-Arnaud, senior economist at Nomura Holdings Inc., said by phone from London. "Sentiment is actually not that bad."

The South African rand, the Aussie, and the kiwi all rose at least 1 percent against the dollar. The rand strengthened 1.8 percent to 13.7223, having touched 14.0682 on Aug. 24, the weakest level on record. The Bloomberg Dollar Spot Index declined 0.4 percent to 1,209.12.

JPMorgan Chase & Co.’s global foreign-exchange volatility index reached 11.30 percent, the highest level since February.

“My best guess for this week is high volatility, especially in the form of jumps,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt.