The rand is paying the price for South Africa’s mounting woes.
The rand is paying the price for South Africa’s woes, with the 20 per dollar level now firmly in sight as investors fret about restrictive monetary policy adding to a deepening power crisis and political missteps to throttle the already ailing economy.
The central bank said its restrictive policy stance was necessary to curb inflation, even as it warned that more rand weakness was likely. But the move will add strain to an economy that’s forecast to grow by just 0.3% this year. The central bank’s hiking cycle will only turn when the price-growth trajectory changes and inflation starts moving toward 4.5%, Governor Lesetja Kganyago said.
Allegations by the US earlier this month that South Africa supplied arms to Russia sent the rand tumbling more than 5% in four days, while the premium investors demand to hold the country’s dollar bonds rather than US Treasuries widened about 30 basis points.
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