Rand slips

JOHANNESBURG. — South Africa’s rand plunged to a 2-year low against the dollar in early trade yesterday and government bonds weakened sharply as a renewed rout in the Turkish lira spread to other emerging market currencies.

The rand slid more than 10 percent earlier in the day to hit a session low of 15 7000 per dollar, its weakest since June 2016. As of 0740 GMT, the turbulent unit had recouped much of its losses to be 3,27 percent weaker at 14 5400.

Momentum indicators tracked by analysts show the move thrust the rand into oversold levels, suggesting a correction is on the cards.

“South Africa’s rand is the most over-traded currency in the world - the equivalent of about 17 percent of its GDP is traded a day - so it’s the best proxy for EM risk and is whacked today because of Turkey,” said Renaissance Capital global chief economist Charles Robertson.

In fixed income, the yield for the benchmark paper due in 2026 was up 18 basis points to 9,035 percent, reflecting weaker bond prices.

The lira has lost more than 40 percent of its value this year on worries over Turkish President Tayyip Erdogan’s increasing control over the economy and deteriorating relations with the United States.

The lira did find a sliver of support when Turkey’s central bank said it had lowered reserve requirement ratios for banks. It also said it would take all necessary measures to maintain financial stability.

“The Turkey crisis was caused by monetary policy reacting in a completely unsuitable manner. Countries with a decent monetary policy should be in a better position,” Commerzbank analysts wrote in a note.