JOHANNESBURG (Reuters) -The South African rand weakened further on Thursday, having slumped more than 6% this week amid concerns over global economic growth and a U.S. credit rating downgrade.
At 1505 GMT, the rand traded at 18.7000 against the dollar, about 1.3% weaker than its previous close.
The dollar last traded at 102.54, about 0.05% weaker against a basket of global currencies.
The rand, like other currencies, weakened against the greenback this week after Fitch’s credit rating downgrade of the U.S. “led to higher credit spreads and risk-off”, Rand Merchant Bank analysts said in a research note earlier in the day.
The rand often takes cues from global economic factors in the absence of major local movers.
“It is difficult to pinpoint what sparked the risk-off shift; however, while this sentiment persists, the rand will remain on the back foot,” said Nolan Wapenaar, co-chief investment officer at Anchor Capital.
The rand traded strongly in July on eased rolling blackouts, an announcement that Russian President Vladimir Putin would not be attending the BRICS Summit of emerging markets in South Africa this month and what appeared to be the last of the U.S. Federal Reserve’s interest rate hikes.
Locally, South African private sector activity contracted for the fifth consecutive month in July as rising prices and weak business confidence weighed on demand, a survey showed on Thursday.
On the Johannesburg Stock Exchange, both the blue-chip Top-40 index and the broader all-share index ended nearly 0.4% stronger.
South Africa’s benchmark 2030 government bond was weaker, with the yield up 7 basis points to 10.440%.
(Reporting by Tannur Anders; Editing by Bhargav Acharya, Bernadette Baum, Jonathan Oatis and Alison Williams)
