Johannesburg - The rand weakened to head for a record low close on speculation a US interest-rate increase will damp demand for riskier assets as South African policy makers struggle to revive an economic expansion.
The currency of Africa’s most industrialised economy is poised for its biggest monthly decline since December as the Federal Reserve shows no sign it will refrain from tightening monetary policy this year.
The rand fell in tandem with developing nations from Brazil to India as the greenback headed for its best month since January.
The tumbling currency underscores the challenges faced by President Jacob Zuma’s administration in reigniting investment and growth in the $366 billion economy.
The country is grappling with power shortages, stubborn unemployment and accelerating inflation that contributed to the first interest rate increase in a year this month.
The rand weakened as much as 1.3 percent before paring losses to trade 1.1 percent down at 12.6754 per dollar as of 1:36 p.m. in Johannesburg.
The currency, which has dropped 8.7 percent this year and 4.2 percent this month, fell to a record intraday low of 13.84 in December 2001.
Bloomberg