JOHANNESBURG: South Africa's rand retreated more than two percent on Monday after a global commodity selloff and a firmer dollar put emerging assets under pressure, with record domestic unemployment adding to its woes. By 1415 the rand had recovered some ground to trade 1.9 percent weaker at 15.1480 per dollar, near its worst level in a month as commodity-linked assets across the board suffered.
"Commodity currencies are all coming under pressure, with commodity prices under pressure and the dollar rising, so you would expect the rand to come under pressure as well," said managing director and chief economist at ETM Analytics George Glynos.
The rand was on the front foot in early trade, boosted by Moody's decision on Friday not to downgrade the country's debt, but quickly lost ground as global risk sentiment soured as growth concerns returned, while creaking fundamentals locally also weighed.
Data for the first quarter showed unemployment rose to 26.7 percent, its highest level on record, rekindling worries over government's ability to revive the economy and avoid downgrades to subinvestment by two other ratings agencies.
Fitch and Standard & Poor's have the country just one notch above subinvestment grade, and are due to make their decisions in June. Finance Minister Pravin Gordhan on Monday said he would seek to convince Fitch and S&P that the country is on the right economic track, but some analysts see politics as a major risk to implementation ahead of local elections in August.
"Today's employment figures are very grim, but tell us little that we didn't already know about South Africa's troubled labour market.
The political impacts may be more significant," said Africa analyst at Capital Economics John Ashbourne. On the bourse resources stocks were also hit by the commodity selloff, with AngloGold Ashanti the biggest decliner among blue chips, sliding almost 10 percent.
Global mining group Anglo American lost almost 8 percent.
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