Johannesburg - The rand hit its weakest level in seven months against the US dollar on Wednesday as the greenback gained over major currencies and investors continued to dwell on South Africa's wider current account deficit.
At 10:28 SA time the local unit traded at 10.9971 against the US dollar after earlier touching 11.0162, the local unit’s worst level since February 21, 2014.
In fixed income, the yield on the benchmark 2026 paper dipped half a basis point to 8.185 percent.
The rand briefly eased to 10.9800 earlier on Wednesday, the weakest it has been since late February, according to Reuters data.
The dollar rallied as investors seemed to be repricing the risk of an earlier US interest rate hike.
The rand remained pressured by Reserve Bank data released Tuesday showing the deficit on South Africa's account expanded to 6.2 percent of GDP in the second quarter from 4.5 percent in the first.
The stubbornly wide current account gap, while adequately covered by external portfolio flows, makes the rand more vulnerable than its emerging market peers during bouts of global risk aversion.
“The combination of the large current account hole and a Fed that might hike earlier than expected makes for a pretty dismal rand environment,” Rand Merchant Bank currency analyst John Cairns said.
“Technically, the way is open to run higher, with January's high of 11.39 attracting targets.” - Reuters