JOHANNESBURG (Reuters) – South Africa’s rand extended its losses against the U.S. dollar on Tuesday after new data showed the economy contracted more than expected in the last quarter of 2022.
At 1546 GMT, the rand traded at 18.5300 to the dollar, about 1.5% weaker than its previous close, and the lowest it has been since early November 2022.
Figures from Statistics South Africa released on Tuesday showed gross domestic product (GDP) contracted 1.3% in the fourth quarter of last year compared to the previous three months, whereas analysts had predicted a 0.4% contraction.
An escalation in rolling power cuts contributed to most sectors shrinking, with declines recorded in agricultural output, mining, finance, trade and manufacturing.
The rand had already weakened early Tuesday after President Cyril Ramaphosa appointed a new electricity minister to try to solve the country’s power crisis, a move analysts had predicted would do little to restore investor confidence.
“The negative (quarter-on-quarter) growth will now heighten recessionary fears for the upcoming GDP print as two consecutive quarters of negative growth constitutes a technical recession,” said Warren Venketas, an analyst at forex trading firm IG.
On the stock market, the blue-chip index of Top 40 companies closed down 0.13% down while the broader all-share index was down 0.18%.
The government’s benchmark 2030 bond was weaker, with the yield up 5.5 basis points to 10.170%.
(Reporting by Anait Miridzhanian and Tannur Anders; Editing by Andrew Heavens and Nellie Peyton)
