The rand was weaker in late trade on Thursday as investors react to President Jacob Zuma authorising the deployment of troops to help authorities police the Marikana area.
“The reason why the rand weakened this afternoon was due to rumours that the army was being deployed at certain mines in Rustenburg. This is spooking investors as they are asking whether this is becoming a police state‚ which is rather harsh‚” said Mark Kalkwarf‚ a senior portfolio manager from the Iquad Group.
At 3.32pm‚ the rand was bid at R8.3695 to the dollar from R8.2671 at Wednesday’s close. It was bid at R10.8162 to the euro from its previous close of R10.7804 and at R13.5272 against sterling from R13.4090 before.
The euro was bid at $1.2927 from $1.3048 at Wednesday’s close.
“The other reason why the rand has weakened is due to the euro’s weakness against the US dollar. Investors are worried about Spain and data from China continues to disappoint the global market‚” Kalkwarf said.
Bonds do not react to steady repo
The South African bond market was weaker in afternoon trade on Thursday‚ but did not react to the as-expected decision of the South African Reserve Bank’s (SARB) monetary policy committee (MPC) to keep the repo rate steady at 5.0 percent.
“The market had priced in no change at this MPC meeting‚ so there was no reaction from the bond market. The markets are very volatile at the moment - we will have to get closer to the November MPC meeting to see what the chances are for a rate cut then‚” a local bond trader said.
At 3.40pm‚ the benchmark R157 bond was trading at 5.410 percent from 5.385 percent at Wednesday’s close. The R207 was bid at 6.450 percent and offered at 6.430 percent from a close of 6.430 percent‚ and the R186 was trading at 7.460 percent‚ the same as its previous close.