South Africa: South African rand hits new record-low level in late-September
October 15, 2015
South Africa’s rand (ZAR) has lost ground against the U.S. dollar in recent weeks, thus continuing a trend that began in mid-2011. The currency tumbled to a new record-low on 24 September when it traded at 14.03 ZAR per USD. The figure was 6.5% weaker than on the same day in the previous month and 25.9% weaker on an annual basis. The currency has lost more than 20.0% of its value since the beginning of the year. The depreciation of the rand comes after renewed concerns over a slowdown in China. Indeed, the pressure on the currency increased after a gauge of manufacturing production in China signaled a contraction for the seventh consecutive months.
On 23 September, the Central Bank kept the repo rate unchanged at 6.00% as growth concerns outweighed risks stemming from a weak currency and an upcoming rate hike by the Fed. Moreover, systematic electricity shortages and a persistent fiscal deficit are also fueling the decline of the currency.
Author: Dirina Mançellari, Senior Economist