South Africa’s rand fell to 13-year low and government bonds also slid sharply on Friday, as emerging markets were heavily sold off after U.S. job numbers strengthened the case for the Federal Reserve to hike interest rates.
The rand tumbled nearly 2 percent to a session trough of 12.0650, its weakest level since early 2002, according to Thomson Reuters data.
In fixed income, the yield on the benchmark 2026 bond jumped 20.5 basis points to 7.95 percent, a level last seen on Jan. 5.
The dollar rose to an 11-year high against the world’s major currencies and U.S. bond yields jumped after U.S. jobs figures reinforced expectations the Federal Reserve will push ahead with its first rate hike in almost a decade.
This also portends bad vibes for the Nigerian bourse which had rallied to a 2.5% gain Friday on the back of strong earnings from two of its biggest banks. The latest job data may see foreign portfolio investors even pull out more funds as they anticipate rate increases.
Prospects of policy tightening in the world’s biggest economy have dented investor appetite for emerging market assets, including Nigeria which, while offering higher yields, are perceived as carrying higher risk.