* Rand weakens to three year lows
* Bonds gain on a subdued inflation outlook
By Vuyani Ndaba
JOHANNESBURG, June 1 (Reuters) – South Africa’s rand plunged
to a three year low against the dollar on Friday as weak U.S.
jobs data intensified fears of a global economic slump and sent
investors scurrying away from risky emerging market assets.
At 1529 GMT, the rand lost about 1.42 percent to 8.6021
against the greenback, earlier in the session the rand touched
8.71 against the dollar, its weakest level since May 2009.
“Massive moves were really caused by outside influences once
again,” said Jim Bryson, a trader at Rand Merchant Bank.
“We started the day with the euro looking very soft, the
rand moved up on the back of that, although there is a general
risk of tone to everything,” Bryson added.
Bonds gained on the possibility of interest rates cuts, the
three year yield shed 4.5 basis points to 6.355
percent and that on the longer dated 14 year paper slid
just 1.5 basis point to 8.375 percent.
“The 157 tracks lower in yield on the concern of global
growth and the fact that inflation is falling not just
domestically but internationally,” said Garth Klintworth, head
of fixed income commodities and currencies at Absa Capital.
Reserve Bank Governor Gill Marcus left interest rates
unchanged in May on the spillover effects of a bleak global
economic outlook, but said that inflation would likely moderate.
The bank has kept rates steady for the past 18 months with
economists expecting the repo rate to remain unchanged
throughout 2012 as the central bank tries to stimulate a fragile
economy against an increasingly turbulent global backdrop.
(Reporting by Vuyani Ndaba; Editing by Toby Chopra)
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