Rand remains weak as perfect storm hits local economy
A weaker local currency, together with higher oil prices, is likely to cause consumer inflation to rise in the coming months, creating a dilemma for the Reserve Bank
The rand had shed 2.3% against the dollar by Tuesday afternoon, as it took the brunt of the news that the South African economy had slipped into a technical recession.Bond yields spiked and retail, banking and property shares were heavily sold off on the JSE, a situation worsened by a stronger dollar against the euro, with the latter weakening to its worst level in two weeks.At the same time, Brent crude is poised to hit $80 a barrel for the first time in three months, further adding to inflation woes for the Reserve Bank, which may be forced to hike interest rates in a moribund economy. Oil prices rallied overnight following the news of the immediate evacuation of two Gulf of Mexico oil platforms, in preparation for a hurricane Gordon, Oanda analysts said. Brent crude was last trading at $79.37 a barrel.The local economy contracted 0.7% in the second quarter, tipping it into a technical recession, which is defined as two consecutive quarters of contraction. The economy declined by ...
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