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Markets

South Africa's rand stumbles as data shows struggling economy

The rand was 0.4pc weaker at 14.6600 per dollar from an overnight close of 14.6020. The statistics agency said
Published December 5, 2019
  • The rand was 0.4pc weaker at 14.6600 per dollar from an overnight close of 14.6020.
  • The statistics agency said growth shrank 0.6pc in the third quarter, raising concerns the country could lose its last investment grade credit rating.

JOHANNESBURG: South Africa's rand was weaker early on Thursday as a batch of economic indicators showed the economy was still on its knees following a surprise third quarter contraction.

At 0940 GMT, the rand was 0.4pc weaker at 14.6600 per dollar from an overnight close of 14.6020.

Data from the central bank on Thursday showed the country's current account deficit narrow slightly but remained large, while a measure of monthly business confidence showed firms were still struggling with the tough economic climate and slack demand.

On Tuesday, the statistics agency said growth shrank 0.6pc in the third quarter, raising concerns the country could lose its last investment grade credit rating.

A late night announcement by President Cyril Ramaphosa's government that loss-making state carrier South African Airways (SAA) would be put into business rescue has yet to affect the currency, but analysts say it may be a net-positive for the country's fiscal position.

"For now, this will feed favourably into the fiscal reform narrative at a time when the dollar is coming under some pressure," said ETM Analytics in a note.

That was partly reflected in bond prices, with the yield on the benchmark paper due in 2026, down 1.5 basis points to 8.415pc.

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