Options Traders See Doom for Rand as Analysts Predict Rebound
- Rand's risk reversal rises to highest since June 2012
- Foreign investors sold rand bonds in August, reversing inflows
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While analysts forecast the worst may be over for South Africa’s rand, options traders are at their most bearish on the currency in more than three years.
That’s bad news for bonds, according to Investec Asset Management Ltd. Foreign investors, who own about a third of rand-denominated government bonds, sold more of the securities than they bought in August as the currency weakened to a record amid concern slowing growth in China will hold commodity prices down and as the Federal Reserve moves closer to raising interest rates. They may dump more debt if the rand extends declines, eroding investor returns in dollar terms.