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Second-quarter GDP data will be released on Tuesday, with analysts polled by Reuters forecasting a quarter-on-quarter contraction of more than 40%.
JOHANNESBURG – The South African rand fell on Monday, as investors abandoned the currency a day before gross domestic product data was expected to show a massive contraction during the country’s strict coronavirus lockdown.
At 1600 GMT, the rand was around 0.93% weaker than its previous close at 16.7500 per dollar.
Second-quarter GDP data will be released around 0930 GMT on Tuesday, and analysts polled by Reuters are forecasting a quarter-on-quarter contraction of more than 40%, extending a recession prior to the COVID-19 crisis.
Adding to the pessimistic mood were power outages by state-owned Eskom, which has long struggled to meet electricity demand due to failures at its ailing coal-fired power plants.
The rand has been on a strengthening trend since mid-August, helped by a healthy investor appetite for riskier emerging market assets and a weak dollar, but those gains are now stalling as the state of the national economy refocuses more. .
“The biggest threat to the ZAR in the long term is the state of South Africa’s fiscal situation. It is unsustainable,” analysts at ETM Analytics said in a note. “The GDP figure could well be the worst impression in a century.”
The broader stock index rose again after seven straight sessions of losses, driven by precious metals companies that gained on the Johannesburg Stock Exchange (JSE) on higher commodity prices.
An index of 10 mining companies was up 2.25% and the gold mining index was up 2.94% at the end of the trading day.
The benchmark FTSE / JSE all share index rose 0.97% to 54,400 points, while the index of the top 40 companies rose 0.94% to 50,185 points at close of business hours.
Bonds were also slightly firmer, and the 2030 benchmark government issue yield fell 4 basis points to 9.19%.
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