The yield on the benchmark R186 long-term bond has risen by more than 100 basis points, even as domestic short-term rates remained anchored by the absence of a change in the Reserve Bank’s repurchase rate, while the CDS spread on five-year sovereign South African debt also widened, generally by a larger amount than those of countries enjoying a similar rating to South Africa.
The domestic equity market has been the exception to this rule, although this partly reflects the “rand hedge” qualities of certain sectors or stocks which, because of the dollar pricing of their outputs or the international diversification of their operations, tend to benefit from a depreciation of the currency.