South Africa’s rand remained on the back foot on Wednesday (2 October), as week US manufacturing data renewed global downturn fears and highlighted the effects of a trade war between the US and China.
US factory activity declined in September to its worst level in over a decade, Reuters reported, while in South Africa, the seasonally adjusted Absa Purchasing Managers’ Index (PMI) dropped to its lowest level in a decade in September.
“Besides sustained weak domestic demand conditions, the poor South African manufacturing print comes against a backdrop of growing concerns about the health of the global economy and, in particular, South Africa’s trading partners in Europe,” Absa said.
The rand weakened against the dollar for a sixth consecutive session, and is currently the worst-performing among emerging-market currencies, Reuters said.
“Global markets were sent into a tail spin yesterday as various manufacturing numbers indicated that the global industrial picture remains dire, awakening renewed fears of an economic downturn,” said Bianca Botes, treasury partner at Peregrine Treasury Solutions
“Alongside other emerging markets, the rand felt the pinch, weakening over 1% against the dollar in late trading yesterday afternoon.”
The local unit lost further ground in afternoon trade on Wednesday, trading at the following levels against the major currencies:
- Dollar/Rand: R15.25 (-0.56%)
- Pound/Rand: R18.71 (-0.88%)
- Euro/Rand: R16.66 (-0.60%)