South Africa’s rand fell to a new 13-year low to the dollar on Monday, after investors sold off emerging market currencies amid heightened expectations of an imminent interest rate hike in the United States.
At 15:08 GMT the rand was trading 0.21% softer at 12.0600 to the dollar after earlier stumbling 0.8% to 12.1330, its weakest level since early March 2002, according to Thomson Reuters data.
The currency recouped some of its losses after Standard & Poor’s said South Africa’s credit rating was unlikely to change at another review in June or in the next 24 months, but an electricity crunch would shave 0.3% off this year’s economic growth.
“The reality is that there is more dollar strength coming through as opposed to market issues. There is a structural problem on our local economy,” said Cheslyn Francis, a portfolio manager at Afrifocus Securities.
“We are not as productive as we hoped. Despite positive data offshore, we are not following that trend. The market is very cognisant of that.”
Expectations of US rate rises are under-cutting most emerging markets after a robust jobs report in the US on Friday buoyed the dollar to 11 1/2-year highs.
In local bonds, the yield on the 2026 benchmark paper was up 0.5 basis points to 7.955%.