Johannesburg - The rand hit its weakest level in seven months against the US dollar on Wednesday as the dollar gained over major currencies and investors continued to dwell on the wider current account deficit.
At 08:38 the local unit traded at R10.9550, a 0.31% drop from the previous day's close in New York.
In fixed income, the yield on the benchmark 2026 paper dipped half a basis point to 8.185%.
The rand briefly eased to R10.9800 earlier on Wednesday, the weakest it has been since late February, according to Reuters data.
READ: Current account deficit shock
The dollar rallied as investors seemed to be repricing the risk of an earlier US interest rate hike.
The rand remained pressured by Reserve Bank data released on Tuesday showing the deficit on South Africa's account expanded to 6.2% of GDP in the second quarter from 4.5% in the first.
The stubbornly wide current account gap, while adequately covered by external portfolio flows, makes the rand more vulnerable than its emerging market peers during bouts of global risk aversion.
"The combination of the large current account hole and a Fed that might hike earlier than expected makes for a pretty dismal rand environment," Rand Merchant Bank currency analyst John Cairns said.
"Technically, the way is open to run higher, with January’s high of 11.39 attracting targets."
At 08:38 the local unit traded at R10.9550, a 0.31% drop from the previous day's close in New York.
In fixed income, the yield on the benchmark 2026 paper dipped half a basis point to 8.185%.
The rand briefly eased to R10.9800 earlier on Wednesday, the weakest it has been since late February, according to Reuters data.
READ: Current account deficit shock
The dollar rallied as investors seemed to be repricing the risk of an earlier US interest rate hike.
The rand remained pressured by Reserve Bank data released on Tuesday showing the deficit on South Africa's account expanded to 6.2% of GDP in the second quarter from 4.5% in the first.
The stubbornly wide current account gap, while adequately covered by external portfolio flows, makes the rand more vulnerable than its emerging market peers during bouts of global risk aversion.
"The combination of the large current account hole and a Fed that might hike earlier than expected makes for a pretty dismal rand environment," Rand Merchant Bank currency analyst John Cairns said.
"Technically, the way is open to run higher, with January’s high of 11.39 attracting targets."