Rand Weakens for Fifth Straight Day on Global Economic Recovery Concerns

South Africa’s rand declined for a fifth straight day after a report showing Japan’s economy expanded less than expected in the second quarter raised concern the global economic recovery is slowing.

The currency depreciated as much as 0.6 percent to 7.3475 per dollar and traded less than 0.1 percent weaker at 7.3126 by 10:53 a.m. in Johannesburg, from a previous close of 7.3070.

Japan’s economy grew at less than a fifth of the pace economists estimated in the three months ended June 30, pushing it into third place behind the U.S. and China. The country’s gross domestic product expanded an annualized 0.4 percent in the second quarter, the Cabinet Office said today in Tokyo, less than the 2.3 percent estimated in a Bloomberg survey.

“ While the natural tendency of the rand is to go stronger it seems that the adverse international environment is going to hold it back,” John Cairns, head of foreign-exchange research at Rand Merchant Bank in Johannesburg, wrote in a client note today. Japan’s lower-than-estimated economic growth is “the latest cause for concern” and may push the rand to weaker than 7.34 per dollar, Cairns said in the note.

Government bonds rose in South Africa, with the benchmark 13.5 percent security due September 2015 climbing 8 cents to 125.19 rand. The yield on the bond fell 2 basis points to 7.44 percent.

Money-market investors reduced bets that South Africa’s central bank will lower its 6.5 percent benchmark rate at its next meeting on Sept. 9, forward-rate agreements show. The cost of three-month contracts for cash in one month rose 1 basis point to 6.30 percent. The rate on the contract fell to 6.25 percent on Aug. 12, the lowest closing level since the central bank first introduced its repurchase rate in 1999.

Against the euro the rand lost 0.4 percent to 9.3538, snapping a five day advance.