Rand takes a hit as oil price and China worries grow

The rand is taking a bigger hit than most of its emerging-market peers as an energy crisis and Chinese growth concerns batter the South African currency and worsen the country’s inflation outlook.

The currency declined for a second day on Monday to its weakest level in more than a month as oil prices soared, while traders fretted over China’s growth hurdles and how that would affect prices of the raw materials that account for close to half of South Africa’s exports.

The weaker currency, along with crude-oil prices at the highest in more than two years, pushed breakeven rates, which reflect bond investors’ expectations of price rises, to levels last seen in June 2019.

“Sentiment still seems very nervous and there is a lot to absorb,” said Matete Thulare, an analyst at Rand Merchant Bank in Johannesburg. It’s “safe to assume that the risk bias remains for rand weakness,” he wrote in a client