Rand sinks as China weakness batters emerging currencies

[NEW YORK] South Africa's rand sank 2.9 per cent against the US dollar on Monday as commodity prices continued to fall, sapping investor confidence in the country's economy.

More signs of weakness in the economy of world's key commodities market, China, over the weekend further hit prices of oil and ore.

On Saturday official figures showed Chinese inflation remained about half the government's target. Prices paid at the factory gate, a guide to future inflation, sank for a 46th consecutive month.

Major currency pairs were only modestly changed from Friday, with the yen slipping back slightly against the euro and dollar. The dollar edged up to US$1.0858 per euro.

The rand fell to 16.81 against the greenback, amid a general slide in emerging currencies and share markets.

It also took a toll on Canada's dollar, which lost 0.3 per cent against the US dollar on Monday as the price of crude oil, Canada's key foreign exchange earner, fell again.

"The renewed decline in crude oil prices may continue to dampen the appeal of the Canadian dollar," said David Song, a currency analyst at DailyFX.

China's yuan meanwhile edged higher as the People's Bank of China raised the daily reference rate - around which the yuan can move up or down two percent - to 6.5626 yuan per US$1. Late in the day the yuan was at 6.5693 per dollar.

AFP