Rand Falls For Second Day Amid Fears Of Weakening Metal Prices

12 March 2012 13:00 - Florence Fullalove

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Rand Falls For Second Day Amid Fears Of Weakening Metal Prices

The rand declined for a second day as signs of a slowdown in China, damped prospects for South Africa’s commodity exports. China is South Africa’s biggest trading partner as China buys about 14% of South Africa’s exports. The currency of Africa’s biggest economy retreated as much as 0.5% and traded 0.1% weaker earlier today.

China’s exports grew at a slower pace than predicted, contributing to the biggest trade deficit in at least 22 years last month, adding to figures last week on factory output and retail sales that all point towards slowing economic growth. Nomvuyo Guma, a currency strategist at Standard Bank Group ltd said, “This has rekindled fears of a ‘hard landing’ for the Chinese economy and, by extension, the global economy.” Guma added, “With the possibility of a further quantitative easing from the Federal Reserve in doubt, much of what was keeping markets buoyant over the past months has faded, which will likely weigh on risky assets.”

Standard and Poor’s GSCI Index of raw materials also fell for the first time in four days as the prices of metals including gold, copper and nickel decline. Metals and other commodities account for 65% of South Africa’s export earnings.

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