Nov 2, 2009
JOHANNESBURG (Reuters) - South Africa's rand was weaker in early trade on Monday, partly on waning risk appetite after briefly diving to a 5-½ month low against the dollar, while stock futures followed world stocks lower.

The rand plunged to 8.50 to the dollar in Asian trade due to selling by a Japanese margin trader, with dealers in Asia suspecting a mistaken trade may have sparked the around 10 percent fall.

It was trading at 7.90 at 0640 GMT, just over a percent weaker than its close in New York.

Risk aversion resurfaced after Wall Street fell 2.5 percent on worries about the U.S. financial sector after CIT Group filed for bankrupcy and an accounting expert said Citigroup may need more writedowns, knocking Asian shares.

Analysts said the big drop in the rand may have been related to platform trading, with trades triggered by specific levels.

"It will be interesting to see if it retraces to levels around 7.80," George Glynos, managing director of market analysts ETM, said. "At this stage that looks as if that move was overdone and it has retraced."

The global stocks decline may hit local markets, although steady gold and higher U.S. stock futures could limit any decline on the resource-heavy bourse.

South Africa's blue chip Top-40 December futures contract was last 1 percent down, suggesting the JSE Securities Exchange would open lower at 0700 GMT.

Investors will watch for the local purchasing managers index, which points to activity in the manufacturing sector, at 0900 GMT, with PMIs also released elsewhere in the world.