UPDATE 1-South Africa's rand hits new 3-week low, stocks slip

  • Reuters
  • Forex News
UPDATE 1-South Africa's rand hits new 3-week low, stocks slip
Credit: © Reuters.

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JOHANNESBURG, July 31 (Reuters) - South Africa's rand slumped to a new three-week low in an emerging market rout on Friday as investors' hopes for a global recovery were dented by a sharp contraction in the U.S. economy.

At 1640 GMT, the rand ZAR=D3 was 1.63% weaker at 17.0250 per dollar, its weakest since July 8, adding to Thursday's 2% plunge. towards the rand has been driven by offshore events in recent weeks, with stimulus programmes by developed market central banks and a relaxation of lockdown restrictions spurring the currency to pre-COVID-19 pandemic levels in June.

But signs of a resurgence in global infections have since tamed global demand for assets perceived as risky. That has put renewed pressure on the rand, which was already vulnerable given South Africa's economic recession and jump in coronavirus cases.

"Fearful of the fundamental economic weakness across the globe, investors have fled to U.S. treasuries and gold. As you'd expect, EM (emerging market) currencies are struggling, with the rand surrendering 20c to the dollar," said RMB's Nema Ramkhelawan-Bhana.

Data on Thursday showed the United States, the world's largest economy, contracted at its steepest pace since the Great Depression in the second quarter. African stocks dipped, tracking global markets. Johannesburg Stock Exchange's Top-40 Index .JTOPI fell 0.16% to 51,369 points, and the broader All-Share Index .JALSH closed down 0.22% at 55,722 points.

Among the fallers, the bullion sector .JGLDX shed 2.45%, with AngloGold Ashanti ANGJ.J down 5.34% to 554.73 rand.

Shares in MTN MTNJ.J closed down 2.46% after scrapping its 2020 interim dividend and announcing its CEO had been appointed to head the enterprise unit of British broadband and mobile operator BT BT.L from next year. were firmer, with the yield on the benchmark government bond due in 2030 ZAR2030= down 5 basis point to 9.245%.

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