South African Rand Drops as Emerging Market ‘Jitters’ Return

  • Investors selling riskier assets: Bidvest’s De Vleeschauwer
  • MSCI Emerging Markets Currency Index declines third day

South Africa’s rand dropped, heading for the lowest in more than a week, as the dollar strengthened and investors shied away from riskier emerging-market assets.

The rand fell as much as 1.6 percent against the dollar, the most among 24 emerging-market currencies tracked by Bloomberg after the Mexican peso. By 3:48 p.m. in Johannesburg, the rand was 1.4 percent weaker at 14.4325, set for the lowest since Sept. 2 on a closing basis. The MSCI Emerging Markets Currency Index dropped a third day, losing 0.2 percent.

“There’s been a bit of a sell-off in riskier assets this afternoon globally, so the rand is just suffering on the back of that, despite the fact that we had decent current-account numbers earlier this morning,” said Ion de Vleeschauwer, chief dealer at Bidvest Bank in Johannesburg. “It’s gone a little bit by the wayside because of global emerging-market jitters. All emerging-market currencies are down; it’s the dollar flexing its muscles again this afternoon.”

Emerging markets fell for a third day, with stocks and currencies extending losses after the worst selloff since June, as projections of a prolonged oil glut overshadowed optimism the U.S. will hold off on raising interest rates next week. South Africa’s current-account deficit narrowed to 3.1 percent of gross domestic product in the second quarter after exports received a boost from the effect of last year’s rand weakness, the central bank said Tuesday in the capital, Pretoria.

The yield on benchmark government bonds due in December 2026 dropped for a second day, falling 3 basis points to 8.7 percent. Johannesburg’s benchmark stock index was little changed after earlier rising as much as 0.5 percent.

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