South African rand slumps by 2% as economy enters recession

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South Africa’s rand fell more than 2 percent on Tuesday and government bonds fell, after the economy slipped into a recession in the second quarter for first time since 2009.

At 0944 GMT, the rand traded 2.25 percent weaker at 15.2150 versus the dollar.

The economy contracted by 0.7 percent in the second quarter, pushing the country into recession after a revised 2.6 percent contraction in the first quarter, data from Statistics South Africa showed.

It said the economy contracted by 0.7 percent quarter-on-quarter, led by declines in the agricultural, transport and retail sectors.

The rand stretched losses against the dollar to more than 2 percent and government bonds fell after the data was released.

“We are in a recession. We reported a contraction in the first quarter … and now in the second quarter with a fall of 0.7 percent,” Statistician-General Risenga Maluleke said.

Statistics South Africa said the economic contraction in the first quarter was steeper than initially recorded, at 2.6 percent, and that gross fixed capital formation fell by 0.5 percent in the second quarter.

South African President, Cyril Ramaphosa is currently in China, attending a summit.

Meanwhile Chinese President, Xi Jinping has pledged $60 billion to African nations at Monday’s opening of a China-Africa forum on cooperation in Beijing.

Peace PIAK