JOHANNESBURG Aug 24 (Reuters) – South Africa’s bonds fell
and the rand weakened against the dollar on Friday, tracking a
weaker euro and also weighed by lingering political risk
concerns in the wake of the recent violence at Lonmin’s Marikana
mine which left 44 people dead.
The yield on the benchmark bond due in 2015
climbed 8.5 basis points to 5.57 percent and that for 14-year
paper jumped 10 basis points to 7.565 percent.
The rand lost as much as 1.2 percent against the dollar
during the session and was at 8.3950 by 1553 GMT, down 0.87
percent from Thursday’s close at 8.3225.
“Market concern following the Marikana mine tragedy has
risen as evidenced by higher CDS (credit default swaps) and a
sell-off of South African external debt relative to similarly
rated peers,” Bank of America Merrill Lynch analyst Matthew
Sharratt said in a note.
“Further evidence of an upsurge in violent protest would be
a negative development for South Africa and raise the risk of a
ratings downgrade given the agencies’ current negative
outlooks.”
Earlier on Friday, rating agency Fitch said the violence at
Marikana highlighted structural problems which may weigh on
South Africa’s sovereign rating in the long term.
Charts point to continued rand weakness, with the currency
presently trading above its short-, medium- and long-term moving
averages. Analysts see another test of its late July low of 8.50
support in the third quarter.
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