South Africa Rate Hike Fails to Stop Rand Slumping to Record Low
- Currency weakens as much as 2.6% following 50-basis-point hike
- Central bank sees economy growing just 0.3% this year
A customer with South African rand banknotes at a street vendor's stall in the Sandton district of Johannesburg, South Africa.
Photographer: Leon Sadiki/BloombergSouth Africa’s rand plunged to a record low as another jumbo rate hike by the country’s central bank raised concerns about the outlook for economic growth.
The South African Reserve Bank increased its policy rate by 50 basis points to 8.25%, the highest since the financial crisis, saying restrictive policy is necessary to curb inflation even as it warned that more rand weakness was likely. The move will add strain to an economy that’s forecast to grow by just 0.3% this year in the face of unprecedented electricity shortages.