South African rand weakens following Brexit

South African rand

South Africa’s rand weakened against the dollar in early trade on Monday as investors’ appetite for risk took a hit from Britain’s vote to leave the European Union.

At 0642 GMT, the rand traded at 15.1800 versus the dollar, 0.6 percent weaker from its New York close last week. It had weakened more than 1 percent earlier in the session.

“Markets remain cautious and are likely to remain so for a significant period of time as the realities of the vote and the timelines of the various outcomes remain somewhat sketchy,” Nedbank Capital analysts in a note.

The EU is one of South Africa’s main trading partners.

The impact from Brexit – which also generated turmoil in global equity, commodity and bond markets – was expected to grow due to its likely negative effect on the European economic and political landscape.

Among many questions Brexit triggered were just how much UK and European economies will slow, how the EU and Britain will negotiate their new relationship, and what European leaders will do to shore up the crumbling union.

Stocks were set to open lower at 0700 GMT, with the JSE securities exchange’s Top-40 futures index down 0.82 percent.

In fixed income, the yield for the benchmark instrument due in 2026 was up 0.5 basis points to 9.115 percent.

Reuters/Ime Njoku