Rand slumps as SA enters recession

The rand fell further against the dollar on Wednesday, extending a steep fall from the previous session, as the economy entered recession.

At 0710 GMT, the rand traded at 15.54 versus the dollar, 1.2% weaker than its close on Tuesday.

Statistics South Africa said on Tuesday that gross domestic product declined 0.7% in the second quarter, after a 2.6% contraction in the first three months of the year.

The unexpected GDP weakness in the latest quarter came as a blow to President Cyril Ramaphosa, who is trying to revive the economy and woo foreign investors.

Tuesday’s GDP figures led many economists to cut their full-year growth forecasts for South Africa.

The rand has also been pressured by a risk-off mood that has swept through global markets in the wake of financial turmoil in Turkey and Argentina.

Emerging market currency peers like the rouble also dropped against the dollar on Wednesday.

On the stock market, the Top 40 Index fell 0.9% in early trade, while the broader all-share index was down 0.8%.

Government bonds also slipped, with the yield on the benchmark instrument due in 2026 up 13 basis points at 9.340%.