The South African Rand weakened against the majority of its most traded peers on Tuesday after GDP data for the African nation came in below economist expectations.
According to data released by Statistics South Africa, the nation’s economy contracted by 0.6% on a quarter by quarter basis in the first three-months of 2014, its first quarterly contraction since the 2009 recession.
The South African economy had expanded by 3.8% in the final quarter of 2013.
On an un-adjusted yearly level the economy expanded by 1.6% compared to the 2% recorded in the previous quarter.
Economists had been forecasting for a quarter-on-quarter contraction of 0.1%, on a yearly basis they had been expecting a growth figure of 1.9%.
“The main contributors to this decrease in economic activity were the mining and quarrying industry which fell by -1.3% and the manufacturing industry fell by -0.7%,” said statistics South Africa.
The weaker-than-expected data will validate South African Central Bank governor Gill Marcus’ decision to keep interest rates on hold at 5.5% last week. The concerns over faltering growth seem to have been validated.
One of the main causes for the fall in GDP is the ongoing strike in South Africa platinum mining sector.
Hopes are growing however that the strike could be ended after New Mineral Resource Minister Ngoako Ramathlodi appealed for an end to the four-month long strike.
“”I appeal to all stakeholders to assist this country to emerge from the crippling strike that is really hurting the economy and individuals involved,” Ramathlodi said after being sworn in to office at the Sefako Makgatho presidential guesthouse in Pretoria on Monday.
The Pound meanwhile softened against a number of other peers including the Euro and US Dollar after the British Bankers Association said that mortgages approved by banks dropped to an eight-month low in April suggesting that the UK housing market is slowing.
South African Rand (ZAR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,South African Rand,17.4936 ,
Euro,,South African Rand,14.2313 ,
US Dollar,,South African Rand,10.4303 ,
Australian Dollar,,South African Rand,9.6246 ,
[/table]
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