South Africa: South African rand hits new record-low level in early-December
December 16, 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 10 December when it traded at 15.20 ZAR per USD. The figure was 6.5% weaker than on the same day in the previous month and 31.20% weaker on an annual basis. The currency has lost more than 30% of its value since the beginning of the year.
The depreciation of the rand comes after Fitch Ratings revised down the sovereign rating to one notch above “junk” status against the backdrop of weak economic prospects due to external and domestic headwinds. Similarly, Standard & Poor’s downgraded the outlook of the country’s debt earlier this month from stable to negative. The currency lost further ground against the greenback after President Jacob Zuma dismissed Finance Minister Nhlanhla Nene in a widely criticized move that crashed the country’s stock market. On 14 December, Zuma appointed Pravin Grodhan as the new Finance Minister. The cabinet shake-up comes amid concerns over the embattled economy.
Author: Dirina Mançellari, Senior Economist