Rand Slumps to the US $

Johannesburg - The rand was weaker in early trade on Wednesday, as investors remained skittish about the outlook for global growth and a bond auction later in the day kept pressure on longer dated fixed-income yields.
The rand was down more than 1% against the dollar, after a sharp spike on Tuesday when it traded at a year low of R7.50 before coming back to close at R7.1050.
Government bonds were under pressure from the weaker currency and an auction later in the session where Treasury has offered R2.1bn worth of 2031 and 2036 government paper.
The auction, usually held every Tuesday, was delayed by a national holiday on August 9. Results of the sale are due after 09:00 GMT when the auction closes.
The yield on the four year note was only one basis point higher at 7.14%, while the longer 2026 bond gave up 7.5 basis points to 8.36%. It fell 13.5 basis points earlier in the session.
"The FOMC said they will keep rates on hold at least until 2013 that's the one reason why the front end is being bought. The expectation is that rates in South Africa will stay flat as well," said Marten Banninga, a bond trader at World Wide Capital Securities in Johannesburg.
The coming auction was also putting pressure on longer yields, he said.
The yield spread between the 2015 and 2026 bonds hit a record high of 123 basis points.
Dealers say the market is very volatile but fair prices should be set during the session.
The rand traded 0.51% weaker by 07:07 GMT, after hitting R7.1890 in the session so far. Analysts do expect a further recovery in the rand from the R7.50 level.
"Early trading action this morning is taking the pair higher and it is quite conceivable that this move heads back up toward the R7.20/2500 area before reversing proper," Tradition Analytics said in a note.