South Africa’s rand plunged to a three year low against the dollar on Friday as weak U.S. jobs data intensified fears of a global economic slump and sent investors scurrying away from risky emerging market assets.
The Rand lost about 1.42 percent to 8.60 against the greenback while earlier in the day the Rand touched 8.71 against the dollar, its weakest level since May 2009.
President Obama said that the sovereign debt crisis in Europe is largely to blame for Amrica’s economic woes. “The whole world economy has been weakened by it, and it’s having an impact on us” said Obama
Reserve Bank Governor Gill Marcus left interest rates unchanged in May on the spillover effects of a bleak global economic outlook, but said that inflation would likely moderate.
The bank has kept rates steady for the past 18 months with economists expecting the repo rate to remain unchanged throughout 2012 as the central bank tries to stimulate a fragile economy against an increasingly turbulent global backdrop.
This will be some respite for battered South African consumers who have been hit hard with petrol and food price increases that are way in excess of the official inflation rate.
And unfortunately things do not look like they are going to get better anytime soon.