Johannesburg – The rand slipped further early on Tuesday after hitting record lows against the dollar in the previous session and looked set to continue its slide before the release of mining and manufacturing data.
The currency tumbled to its lowest in six years, down by more than 2% on Monday, after the current account deficit came in worse than expected and South African power utility Eskom said power shortages could spill into 2015.
By 06:50 GMT on Tuesday, the rand was 0.13% weaker at R11.5630/$, well beyond a technical resistance level of R11.5000, opening the door for the currency to test the 12.000 mark last seen in March 2002.
“The trend is intact. The rand has broken this year’s quadruple top at 11.38 and is now en-route to higher (weaker) summits,” said Warrick Butler, an analyst at Standard Bank.
Bonds were weaker, with the yield on the benchmark issue due in 2026 adding 3 basis points to 7.825%.
The rand was the worst performer amongst its emerging market peers, although most were hurt by gloomy global growth, continued dollar strength, and worries about the timing of the US Fed’s rate hike.
“The Bank for International Settlements is showing real concern about the health of the outlook given the increase in US dollar loans to emerging markets, and the effect that will have on EM finances once the US start to raise rates,” Butler added in a market note to clients.
Stats SA publishes mining and manufacturing figures for October at 11:30 and 13:00 respectively.
A steel and engineering body said on Monday chronic power shortages have already cost the sector R6bn in lost output.
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