Africa

South Africa rand hits all-time low against the dollar

Rand notes and coins
Image caption The rand fell more than 2% against the dollar when the currency market opened on Monday

South Africa's currency has fallen to an all-time low against the US dollar.

It briefly hit a rate of 14 to the dollar amid concerns about the strength of the Chinese economy, reports the Reuters news agency.

Economies that rely on the sale of commodities - such as South Africa's - have been hit by the slowdown in growth in China, a major source of demand.

The problem was compounded when China unexpectedly devalued its currency earlier this month.

The rand is particularly vulnerable because it is one of the globe's most highly traded emerging market currencies, South African economist Martyn Davies told the BBC.

He added that South Africa's central bank will find it hard to defend the currency against a slide in value, instead the government needs to address some of the fundamental economic issues such as the problems in the power sector.

Analysis: Lerato Mbele, BBC Africa Business Report, Johannesburg

Image copyright EPA

China is South Africa's number one trading partner and a weakening of the Chinese economy will affect the demand for South African goods.

So, the immediate future is not promising.

While other countries have also been affected by the China slowdown, the situation in South Africa has been made worse by the general state of the domestic economy.

In the past year South Africa's economy has struggled to raise growth above 2%.

One factor is the continued labour unrest leading to regular strikes in key areas such as mining.

Another is the electricity shortages due to poor maintenance of the national grid.

For South Africa, there will be a need for deeper evaluation, even after global markets show signs of recovery.

Impact felt elsewhere

Several other African currencies have been under pressure in recent weeks over fears of a Chinese economic slowdown.

With oil currently hovering around $40 (£25) a barrel, there are concerns about the prospects for oil-based economies, especially Nigeria and Angola.

The relative strength of the US dollar has also had an effect on - among others - the Zambian kwacha and the Ugandan shilling, which have both hit record lows in the past week.

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