Rand Little Changed Versus Dollar After Biggest Drop Since 1994

By Antony Sguazzin and Janice Kew

Oct. 16 (Bloomberg) -- South Africa's rand was little changed against the dollar, a day after plunging by the most since at least the end of apartheid in 1994 on concern a global economic slump will depress demand for the country's exports.

The rand sank as much as 18 percent in the final hours of trading yesterday as U.S. stocks dropped by the most since the crash of 1987 amid speculation a global recession is looming. Equities tumbled today in Asia and U.S. stock index futures slid.

``This was an unbelievable blowout,'' said Marc Copeland, a Cape Town, South Africa-based currency trader at Investec Asset Management, which oversees about $60 billion. ``Investors are scrambling for money, they have been hurt everywhere around the world and they are getting out of these emerging markets because they are too risky.''


South Africa's currency dropped 2.1 percent to 10.8749 per dollar as of 7:52 a.m. in Johannesburg, extending yesterday's 17 percent rout. The rand was lower against 13 of its 16 major counterparts, slipping 0.8 percent against the euro to 14.4396, after losing 15 percent yesterday.

The prices of commodities, which South Africa relies on for export income, slumped. The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials fell 4.7 percent yesterday. Platinum, which competes with gold as South Africa's biggest export, slipped 2.5 percent in Asian trading today.

The rand may weaken to 13 per dollar, Copeland said. He didn't give a timeframe.

The falling currency is clouding the inflation outlook in South Africa, Tito Mboweni, the country's central bank governor, said late yesterday in a speech in the capital, Pretoria.

``It's a terrible situation to be in,'' he said.

To contact the reporters on this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net; Janice Kew in Johannesburg at jkew1@bloomberg.net