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South Africa's rand hits record lows against dollar, sterling
The hand of Former South African Reserve Bank Governor Gill Marcus is seen holding South Africa's new rand banknotes - which feature an image of former president Nelson Mandela on the front in a file photo. PHOTO BY REUTERS/Siphiwe Sibeko
14/08/2015
JOHANNESBURG (Reuters) - South Africa's rand pushed to fresh 14-year lows against the dollar on Friday, and was at its weakest ever against the pound, hit by worries about the local economy and prospects of imminent U.S. policy tightening.
The threat of wage strikes in the gold sector had brought back to the fore investors' concerns about Africa's most developed but ailing economy, which is grappling with its worst electricity crisis since 2008, analysts said.
The rand stumbled to a session low of 12.8895 against the dollar, the weakest it has been since Dec. 2001.
By 0705 GMT it was at 12.8500, down 0.34 percent from Thursday's close and on track for its biggest weekly loss since the week ended July 24.
It also fell to an all-time low of 20.1071 versus the pound, according to Thomson Reuters data.
The rand was among the five weakest performers against the dollar in a basket of emerging market currencies tracked by Reuters.
The South African currency tends to be vulnerable to bouts of EM sell-offs because South Africa relies heavily on portfolio inflows to plug its current account deficit.
"The rand looks edgy at weak levels, at risk from data and with one eye still on China," Rand Merchant Bank analyst John Cairns said, referring the to the devaluation of China's yuan currency which rattled markets earlier in the week.
"Local news is worrying as the breakdown of wage talks raises the prospect of a strike in the gold industry," Cairns added.
Government bonds weakened alongside the rand, with the yield for the 2026 benchmark nudging 2 basis points higher to 8.175 percent.
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