Rand hits 7-year low against pound

Cape Town - Together with a rand-dollar exchange rate, which always remains in the spotlight, other exchange rates came to the fore last week, as the rand plunged.

The rand traded at its weakest level against the British pound since 2008. Overnight it dropped to R19.22, but recovered to R19.13 by 11:30.

According to Nedbank Capital the rand has breached "oversold terrain" against the dollar and should recover slightly. It recovered to R12.47 overnight, but again dipped, and by 11:30 a dollar would have set you back R12.50.

Nedbank Capital is also pessimistic about the rand-euro exchange rate, saying R14.40 seems to be a possibility. It hit R14.16 in early trade and by 11:30 it traded at R14.11.

International factors such as Greece, a stronger dollar, and local factors such as poor job creation and lame economic growth has been blamed for rand weakness.

The rand-dollar exchange rate usually receives more attention because resources are sold in dollars and South Africa, which imports more than 75% of its fuel, pays for it in dollars.

The weaker rand therefore has a direct impact on South African consumers and economists are increasingly reaching the conclusion that a higher interest rate is a solution to this problem.