South Africa's rand weakened against the dollar as investors cautiously awaited minutes due for release late on Wednesday from last month's United State's Federal Reserve meeting for any hints on rate hike plans. At 1530 GMT the local currency was 0.57 percent weaker at 12.9750 per dollar compared with Tuesday's close of 12.9020.
The rand, which touched a fresh 14-year low on Tuesday, was among the five weakest performers against the dollar in a basket of emerging market currencies tracked by Reuters. Emerging market currencies were volatile and the MSCI's main EM stocks index was at a four-year low, as the wave of global risk aversion sparked by China's troubles and the Fed minutes refused to relent. "It's going to be key for us tonight. If the Fed is not as hawkish then rand recovery could be on the cards because we're on pretty much over-sold levels," said Ion de Vleeschauwer a forex chief dealer at Bidvest Bank.
Traders shrugged off local growth in retail sales that accelerated to 3.5 percent year-on-year in June, from a revised 2.3 in May but could be under pressure as weak credit growth and low consumer confidence points to a more challenging second quarter. Rising electricity costs, high unemployment and a recent interest rate hike are squeezing already indebted consumers in Africa's most advanced economy. Local headline consumer inflation data further pressured the rand as data showed inflation accelerated to 5.0 percent year-on-year in July from 4.7 percent in June, driven by an increase in the price of petrol and electricity tariffs.