South Africa’s rand tumbled to it’s lowest since 2011 on concern that the plunge in global commodity prices will deepen further.
The rand weakened 3.3 percent to 13.41 a dollar in early trade, the most since September 2011. It fell to 14.07 earlier, the lowest on record, and has dropped 14 percent this year.
The currency of Africa’s most-industrialized economy led declines in emerging-market exchange rates, hurt by lower prices for resources that account for more than half of its exports.
Losses have been exacerbated by concern over growth in China, the top destination for South Africa’s raw materials, and the prospect of higher U.S. interest rates in September.
This week was another concerning one for the Rand exchange rate, with the emerging-market asset weakening beyond 13 Rand per Dollar (a fresh 14-year conversion low) and hitting yet another record low against the Pound.
While unrest in the domestic gold mining sector was partly responsible for the Rand’s weakness, concerns relating to the slowdown in China (a major importer of South African commodities) also took a toll, as did fluctuating Federal Reserve interest rate hike expectations.
The problem is said to be as a result of China devaluing its currency earlier this month.
The rand is particularly vulnerable because it is one of the globe’s most highly traded emerging market currencies.
Several other African currencies have been under pressure in recent weeks over fears of a Chinese economic slowdown.