South African Rand Is Back to Its Bad Old Way
- Foreign flows to the bond market turn negative year-to-date
- Rand seen weakening to 13 per U.S. dollar by year end: Nedbank
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Bearish signs are stacking up for South Africa’s rand. Volatility is rising and with it the cost of protecting against a weakening currency, short positioning is soaring and foreigners are fleeing South African bonds at a rate last seen 18 years ago.
After outperforming emerging-market peers for much of the year, the rand is falling into line as rising U.S. Treasury yields spark dollar strength, damping demand for riskier assets. The South African currency is down 5.6 percent against the dollar over the past month, and more pain is in store as the currency resumes its mantle as one of the most volatile in developing nations according to strategists at Nedbank Group Ltd.