September 5, 2018 / 7:29 AM / 18 days ago

Rand slumps as South Africa enters recession

JOHANNESBURG (Reuters) - South Africa’s rand fell further against the dollar on Wednesday, extending a steep fall from the previous session, as the economy entered recession.

At 0710 GMT, the rand traded at 15.5400 versus the dollar, 1.2 percent weaker than its close on Tuesday.

Statistics South Africa said on Tuesday that gross domestic product declined 0.7 percent in the second quarter, after a 2.6 percent contraction in the first three months of the year.

The unexpected GDP weakness in the latest quarter came as a blow to President Cyril Ramaphosa, who is trying to revive the economy and woo foreign investors.

Tuesday’s GDP figures led many economists to cut their full-year growth forecasts for South Africa.

The rand has also been pressured by a risk-off mood that has swept through global markets in the wake of financial turmoil in Turkey and Argentina.

Emerging market currency peers like the rouble also dropped against the dollar on Wednesday.

On the stock market, the Top-40 index fell 0.9 percent in early trade, while the broader all-share index was down 0.8 percent.

Government bonds also slipped, with the yield on the benchmark instrument due in 2026 up 13 basis points at 9.340 percent.

FILE PHOTO: South African rand coins are seen in this photo illustration taken September 9, 2015. REUTERS/Mike Hutchings/File Photo

Reporting by Alexander Winning; Editing by Angus MacSwan

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