* Rand breaches key support against stronger dollar
* Bond yields shoot up 18 basis points
* Retail sales slow sharply in January
JOHANNESBURG, March 14 (Reuters) – The rand tumbled
over two percent against the dollar after surprisingly weak
retail sales data while a strong dollar on Wednesday jolted the
currency out of its recent lethargy.
Bond yields shot up to two-month highs, tracking U.S.
Treasuries which were weighed by the Federal Reserve’s
acknowledgement of some improvement in the world’s biggest
economy. That prompted traders to move into sell-off mode at
Wednesday’s local opening.
“U.S. Treasuries have spiked, bond yields in many emerging
markets have spiked as well,” said George Glynos, managing
director an financial consultancy ETM said.
“You also had a resurgent dollar which placed the gold price
under a bit of pressure. All of that combined proved a little
bit too much and tipped scales back in favour of a weaker rand.”
The rand fell to a three-week low of 7.6851 to the
dollar, breaching key support first at 7.64 and then last week’s
7.68 support. The local unit closed at 7.5290 in New York on
Tuesday.
January retail sales numbers showed growth had slowed to 3.9
percent on an annual basis, surprising economists who had
expected 7.1 percent growth and sending the rand weaker as the
data suggested economic growth in the first quarter may be
poor.
Continued…
