Affected further by Brexit from the European Union, the SA rand has once more been slashed by more than a percent against the US dollar.
Having traded at below R14.50 earlier this week, the rand traded at R14.89 against the dollar on Wednesday morning trading while it gave up some gains it made against the pound, and the euro – trading at R19.28 and R16.44 respectively.
A separate report showed the private sector slipped back into contraction in June as output fell and companies engaged in a massive job cut and like other emerging markets, South Africa market became a victim on Wednesday to renewed fears over instability in the European Union – triggering risk aversion.
Report from Reuters has it that the All-Share index also continued its recent downward trend – trading 0.76% weaker to 51,374 points.
It also noted that recent domestic data points to a slow growth, leaving the country vulnerable to sovereign credit rating downgrades before year-end.
Survey also revealed on Tuesday that consumer confidence derailed further in the second quarter of the year, signaling households’ concerns about the gloomy economic outlook.
“Morning markets appear to remain cautious … Brexit risks currently dominate,” analysts at Nedbank said in a note, adding that minutes of the most recent US Federal Reserve meeting, due out later on Wednesday, would give the market further steer.
Brexit Affects African Countries
Brexit gives huge concern to economists and marketers who believe will have negative effect on African economy especially that of South Africa.
There is also a concern that with the exit of Britain from the EU, UK will now disengage from Africa, as its economy inevitably slows, and foreign aid flow continues to reduce.
While the UK has a firm commitment to spend 0.7 per cent of its Gross National Income on development aid, an eventual recession in the UK would decline Gross National Income in absolute terms and thus diminish development aid to Africa.