South Africa\u2019s rand weakened after President Cyril Ramaphosa had to stave off a leadership challenge from party rivals opposed to his efforts to curb corruption and implement economic reforms.<\/p>\n
The rand slipped as much as 0.9%, leading emerging-market currency declines against the dollar. Implied volatility jumped the most in almost a month, suggesting options traders anticipate wider swings in coming weeks.<\/p>\n
South Africa\u2019s government is battling to revive an economy that was mired in recession before the coronavirus outbreak and which the Treasury expects to contract more than 7% this year.<\/p>\n
Ramaphosa\u2019s efforts to stem corruption have been undermined by a faction of the ruling African National Congress that\u2019s backed by his predecessor Jacob Zuma, who was ousted in 2018 amid allegations of graft.<\/p>\n
\u201cSouth Africa is facing a particularly bleak second-quarter GDP and unemployment outcome, and ongoing opposition to the necessary reforms to achieve a strong, persistent economic recovery is weighing on the domestic currency,\u201d said Annabel Bishop, the Johannesburg-based chief economist at Investec Bank Ltd.<\/p>\n
\u201cA continued weak economic growth environment will enforce further credit-rating downgrades and weaken the rand.\u201d<\/p>\n
South Africa lost its last investment-grade credit rating when Moody\u2019s Investors Service downgraded its assessment in March. That added fuel to a selloff of the country\u2019s bonds, with net outflows reaching a record 59 billion rand ($3.5 billion) on Aug. 28.<\/p>\n
The rand was 0.7% weaker at 16.7138 per dollar by 01h35 in Johannesburg, paring its advance this month to 2.1%. Yields on benchmark 10-year government bonds dropped two basis points to 9.29%.<\/p>\n