Rand weaker on GDP decline

Story link: Rand weaker on GDP decline

The South African rand weakened Tuesday after new data showed that the global recession has arrived in South Africa after the gross domestic product there dropped by 6.4 percent on an annualized basis in the first quarter of the yea r, much more than the 3.9 percent decline that had been anticipated.

There is speculation that the South African Reserve Bank could cut interest rates by half a percentage point to a full percentage point from the current 8.5 percent when policy makers meet on Thursday.

At around 11 a.m. in New York, the rand traded at R8.2915 to the US dollar while it was at R11.5933 to the euro.

Meanwhile, the pound was up versus the euro but down in relation to the greenback on reports that industrial orders in the Eurozone were down 26.9 percent in March from the same month last year and fell 0.8 percent from February’s orders.

Additionally, the euro was hurt by reports that the president of German bank regulator BaFin said that debt levels for German banks could balloon in the absence of their participation in a government program to help the financial system there, leading to speculation that UK banks might do better than Eurozone banks in the current financial climate.

In late morning trade in New York, the pound traded at 87.75p to the euro while it took $1.5941 to buy a pound.