Rand piles on losses as SA enters recession

After starting the week on the back foot, the rand continued to fall in early trade on Tuesday following the announcement by Stats SA that the country was in a technical recession. 

The local currency, which lost 1.5% against the dollar at the start of the week, ended Tuesday at R15.34/$. 

At 11:30, Stats SA announced that the country's real gross domestic product had contracted by 0.7% in the second quarter of the year. South Africa has now entered a technical recession, after GDP contracted by 2.2% in the first quarter. 

The local currency soon fell to R15.23/$ at by noon, and continued to weaken during the afternoon. 

Bianca Botes of Peregrine Treasury Solutions said in an earlier morning note the rand was still being battered by emerging market weakness.

"As contagion fear spreads in emerging markets, hitting the Turkish lira and the Argentinian peso the hardest in overnight trade, the narrative remains unchanged," she said. 

According to Bloomberg, pressure on the rand could get worse as traders fret about a push for land reform that may have far-reaching economic consequences.

Update: This article was updated with the new rand/dollar exchange rate at 11:50. 

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