JOHANNESBURG, (Reuters) – The South African rand slumped further on Wednesday, after tumbling as much as 2% on Tuesday, as risk-off sentiment increased on concerns about global economic growth and a credit rating agency downgraded the United States.
At 1509 GMT, the rand traded at 18.5000 against the dollar , about 1% weaker than its previous close.
The dollar last traded at 102.71, around 0.7% stronger against a basket of global currencies, as it shrugged off losses incurred following rating agency Fitch’s surprise decision to downgrade the U.S. to AA+ from AAA.
Economic data this week showed manufacturing activity contracted in the U.S., Germany and China and other nations.
“All (emerging market) currencies came under pressure as global growth concerns resurfaced after a raft of manufacturing PMI numbers around the globe all printed below the 50.0 mark,” said Andre Cilliers, Currency Strategist at TreasuryONE.
Investec analyst Annabel Bishop said the weakness of the rand was also influenced by the U.S. credit rating downgrade, sparking risk aversion in global financial markets as investors scurried towards the safety of dollar.
Shares on the Johannesburg Stock Exchange were dragged down by energy and technology stocks, with the broader all-share index ending 2.75% lower and the blue-chip Top-40 index closing down 2.9%.
South Africa’s benchmark 2030 government bond was weaker, with the yield up 4 basis points to 10.370%.
