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JOHANNESBURG — South Africa’s rand eased against the dollar early yesterday, as the currency continued to nurse losses a day after the central bank unexpectedly cut lending rates and the finance minister warned of a deep recession this year.
At 0625 GMT, the rand traded at 18,4770 per dollar, 0,91 percent weaker than it’s previous close.
The South African Reserve Bank on Tuesday reduced its main lending rate by another 100 basis points to 4,25 percent to address the deepening economic impact of the coronavirus outbreak, and signalled further cuts could follow.
Separately, Finance Minister Tito Mboweni acknowledged that there would be a deep recession this year because of the global Covid-19 pandemic.
“The downside risks are likely to dominate in the rand while an end of the corona crisis in not in sight,” analysts at Commerzbank wrote in a note.
The central bank projects that the economy will contract 6,1 percent in 2020, while the International Monetary Fund forecasts a 5,8 percent dip.
Africa’s most industrialised nation was already in recession before it recorded its first case of the new coronavirus in March.
The country has the most confirmed coronavirus cases in sub-Saharan Africa, at 2,415, and that number is expected to rise significantly as more tests are conducted in far-flung rural areas and overcrowded informal settlements.
In fixed income, the yield on the 10-year government bond due in 2030 was 0,5 basis points to 10,425 percent. — Reuters Africa.
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