South African Rand Weakens to Lowest Level Since October 

(Bloomberg) -- South Africa’s rand weakened past 15 per dollar for the first time since October, extending a decline sparked by the worst quarterly economic contraction in a decade and a ruling-party debate about the mandate of the central bank.

The currency weakened as much as 0.9% to 15.0081 per dollar before paring the decline to trade at 14.9628 by 5:12 p.m. in Johannesburg. A sustained move above 15, the 76.4% Fibonacci retracement level, would set up a move toward the September high of 15.69.

South Africa’s economy contracted 3.2% on an annualized basis in the first quarter amid rolling electricity blackouts and a slump in manufacturing and mining production, data showed this week, the most since a recession in 2009. That sparked a debate about the role of the South African Reserve Bank, with some African National Congress leaders calling for quantitative easing to support growth.

Derivatives traders are boosting bets on interest-rate cuts that may fuel growth, but would weigh on the rand as the country’s widening current-account deficit increases its reliance on foreign purchases of stocks and bonds. Forward-rate agreements are pricing in an 80% chance of a 25 basis point cut next month, and another by year-end.

Fresh jitters in emerging markets following Mexico’s credit downgrade added to investors’ concerns as the trade war continues to sap demand for riskier assets.

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