JOHANNESBURG: South Africa's rand tumbled to its weakest in more than a week on Thursday as financial crises in Turkey and Argentina rattled sentiment toward emerging markets and stoked another wave of selling on the local currency.
"The entire EM is a sea of red," said currency trader at Rand Merchant Bank Jan Sluis-Cremer.
"The rand's being dragged down by other emerging markets. We saw Argentina implode overnight and that's sparked some selling across the board and it seems like the rand is being used as a proxy hedge," said Sluis-Cremer.
At 0830 GMT the rand was down 1.76 percent to 14.6100 per dollar, its weakest since Aug. 20, falling rapidly as trading on London desks resumed after ending overnight at 14.4253.
The Argentine peso crashed over 7 percent after a investor confidence there collapsed following its request to the International Monetary Fund (IMF) to speed up disbursement of a $50 billion loan programme.
Sentiment towards emerging markets was also hurt by Turkey's ongoing financial crisis, and the lira was amongst the hardest hit by the fresh bout of investor nervousness, diving nearly 2 percent to a 2-month trough.
Bonds also weakened, with the yield on the benchmark paper due 2026 up 6 basis points to 9 percent.
Stocks opened on the backfoot with mobile operator MTN tumbling 23 percent after Nigeria authorities ordered the South African telecoms group and its bankers to return $8.1 billion.
Nigeria's central bank said the funds had been illegally moved abroad because the company's bankers, who include South Africa's Standard Bank's Nigerian unit Stanbic , had failed to verify that Africa's biggest telecoms company had met all the foreign exchange regulations.
Standard Bank denied any wrongdoing.
Its shares fell 3.2 percent on the news.
"The MTN saga is not helping South African markets at all," analyst at TreasuryOne Wichard Cilliers said.
"But that's only a small part of it. It's really all about emerging market sentiment."
The Top-40 index was down 1.38 percent to 53,317 points while the broader all-share index slipped 1.14 percent to 59,477 points.
The local bourse has fed off positive earnings results from Wall street firms, managing ten straight sessions of gains before Thursday's dip, with analysts saying it could be the start of a correction.