Rand weakens further after shock GDP slump

The rand continued to weaken against the dollar on Wednesday, a day after local data showed the economy suffered its worst quarterly contraction in a decade at the start of 2019.

The rand is also reeling from news that South Africa’s ruling party is arguing over whether to change the central bank’s mandate to include employment and growth as well as inflation. Investors are wary of any changes that could curb the independence of the bank.

Read: Top ANC officials clash over Sarb mandate

At 0652 GMT, the rand was 0.61% weaker at 14.74 per dollar.

Bonds also weakened, with the yield on the benchmark 10-year issue ZAR186= up 2.5 basis points to 8.475%.

The statistics office said gross domestic product contracted a quarterly 3.2% in the first three months of 2019, lagging the 1.7% decline economists had expected and showing President Cyril Ramaphosa’s growth drive is struggling to gain traction.

Read: Economy nosedives in Q1, hurting rand

“The pressure on the rand remains, with a weakening bias, as local and fundamental elements contribute to a hostile environment,” Bianca Botes, Corporate Treasury Manager at Peregrine Treasury Solutions said in a note.

The Top 40 index climbed 0.49% to 50 698 at market open.