The Rand touched a fresh 14-year low against the US Dollar today amid concerns about the ailing local economy and after a US Federal Reserve official backed a US rate hike next month. Investors are worried that growth in the economy has remained subdued since a 2009 recession with output seen below 2% this year, partly due to the electricity crisis. Economic Development Minister Ebrahim Patel said on Wednesday that the key mining sector, which accounts for about 7% of GDP, is in “trouble” as it struggled with widespread job losses and lower commodity prices.
The Rand hit a session low of ZAR 12.7725, its weakest since December 2001 according to Thomson Reuters data. The local unit was trading at ZAR 12.7580 by 08:31, down 0.1% from yesterday’s close.
The move partly reflected a stronger dollar after a US Federal Reserve official expressed support for an interest rate hike in September. “The rand’s upward assault on 12.80 continues, albeit at a far more measured pace than last week,” Rand Merchant Bank’s John Cairns said in a note. “Movements are indicative of dulled investor sentiment toward the broader emerging market complex as evidenced by the continued weakness in the rand’s commodity-linked peers.”