Reuters South Africa – South Africa’s rand eased against the dollar on Monday, tracking a general weakness among commodity currencies triggered by a sell-off by hedge funds and may trend weakerduring the session, dealers said.
The rand was softer at 7.2230 to the dollar at around 0655 GMT, 0.5 percent weaker than its close in New York on Friday of 7.1850.
“The dollar has come back quite strong even after those horrible (U.S.) non-farm payroll figures (on Friday). We think it has got a lot to do with metals and all these hedge funds losing money on commodities,” one Johannesburg trader said.
“I think you’ll see all the commodity currencies weaken a bit over the next couple of days on the back of that. It’s more related to funds doing bad than actual dollar strength,” he added.
A recent fall in metal markets has renewed concerns that hedge funds making big bets on high prices may be in trouble, after a few funds went out of business last year.
Copper and zinc took a hammering Friday on market jitters over reports that a hedge fund specialising in metals had suffered losses. Prices for the two major base metals have slumped as stockpiles grew after sales slowed to China, a key market.
On Monday gold, from which South Africa draws a large chunk of its export earnings, bounced back on bargain hunting after falling more than 1 percent in New York but a firmer U.S. dollar weighed and investors awaited more direction from the currency market.
Bullion was last trading at $647.20/647.90 an ounce.
