UPDATE 1-South Africa's rand retreats as global risk demand declines

  • Reuters
  • Forex News
UPDATE 1-South Africa's rand retreats as global risk demand declines
Credit: © Reuters.

(Updates rand , bonds; adds stocks)

JOHANNESBURG, Feb 17 (Reuters) - South Africa's rand weakened on Wednesday, extending losses for a second day, as global risk demand diminished and some investors took profits on the local currency's recent rally.

At 1505 GMT, the rand ZAR=D3 was 0.29% weaker at 14.7100 per dollar, following a rally to a one-year best earlier in the week as investors betting on a faster global economic recovery chased the high yield on local assets.

But overnight trade saw investors reassess bets on the pace and distribution of a global recovery. Signs of further economic activity and inflation in the United States prompted fresh demand for the dollar and U.S. bonds.

"After having made considerable gains over the course of the month thus far, a combination of factors saw the rand retreat," said analysts at Nedbank in a note.

"Both as it failed to make any headway beyond the support at 14.40 and on talk by an international bank suggesting that any long rand positions be squared out to its clients."

Citigroup Inc (NYSE: C ) C.N said on Tuesday it was booking a profit in its three-month bet on the rand versus the U.S. dollar. retreated on profit booking that occurred across global markets but remained near record highs on global economic recovery optimism and as South Africa started its COVID-19 vaccination drive.

The benchmark all-share index .JALSH dropped 0.17% at day's close to 67,110 points and the blue-chip top-40 companies index .JTOPI slipped a tad 0.06% to end at 61,738 points.

The biggest drop was seen in gold-mining companies with the index .JGLDX shedding over 5% of its gains in the day on lower gold prices.

Bonds weakened, with the yield on the benchmark 2030 government issue ZAR2030= up 9.5 basis points to 8.720%.

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  • Wesley Govender @Wesley Govender
    The rand didn't weaken, the US Dollar has made a sharp comeback against all bases....
    Like 0