April 25, 2018 / 1:56 PM / a year ago

South Africa's rand, bonds hit hard as dollar rally continues

JOHANNESBURG (Reuters) - South Africa’s rand tumbled to its weakest in more than the three months while bonds also slipped, as a rally in the dollar and U.S. Treasuries coupled with rising geopolitical tension battered emerging currencies on Wednesday.

South African bank notes featuring an image of former South African President Nelson Mandela are displayed at an office in Johannesburg January 17, 2013. REUTERS/Siphiwe Sibeko

At 1220 GMT the rand was down 1.38 percent at 12.5000 per dollar, its weakest since January 10, having hit a session-low of 12.5325 as a wave of risk-off sentiment wreaked havoc on emerging market currencies.

The Russian rouble was down one percent while the Turkish Lira slipped 0.4 percent.

“The rand has caught the cold from the U.S. dollar moves,” said Jameel Ahmad, global head of currency strategy at FXTM.

“The rand has weakened a lot this week and it’s because of a lot of external risks. We’ve see that the euro suffers, the yen’s suffered and the pound’s suffered. It’s not a South Africa story,” Ahmad said, pointing to rising oil prices and worries over a breakdown in the U.S.-Iran nuclear deal.

President Donald Trump has threatened to scrap the 2015 agreement - under which Iran curbed its nuclear programme in return for sanctions relief, sparking a wave of risk-off sentiment globally.

The dollar hit a four-month high on Wednesday after a rise in benchmark U.S. Treasury yields above three percent rattled some currency bears and led investors to consider whether the greenback was breaking out of a prolonged weak spell.

Spot oil remained near three-year highs on the day.

The yield on the benchmark bond due in 2026 was up 10 basis points to 8.335 percent, its highest since Feb. 14.

On the bourse stocks were also weaker, with the Top40 blue-chip index down 1.3 percent at 50,213 points and the wider All-Share index down 1.2 percent at 56,966 points.

Gold Fields and AngloGold Ashanti led the losers on the Top40, down 7.6 percent and 3.8 percent to 45.30 rand and 289.96 rand respectively.

Rand-linked stocks, mostly banks and financial were also hit by the slide in the currency.

Financial services giant Sanlam along with the four big banks - Absa, Nedbank, Standard Bank and FNB - were all down more than two percent.

Reporting by Mfuneko Toyana, Editing by William Maclean

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