The move comes as South Africa is still reeling from the recession, declared last week.
In what is perhaps a welcomed relief to the South African economy, the rand retreated back to under R15 against the US dollar on Wednesday, 12 September 2018 – the first time in a week.
The local currency opened the day’s trade at R15.05/$ and was changing hands at R14.98 to the greenback at 15:15, up 0.5 percent on the day.
By 06h00 on Thursday, 13 September 2018 the rand sat on R14,94 to the US dollar.
This comes as analysts had expressed concern over the recession announced last week.
Statistics SA announced on Tuesday, 4 September 2018 that the country’s Gross Domestic Product had decreased by 0.7% in the second quarter of the year. This follows a revised fall of 2.6% in the first quarter of this year.
A technical recession is defined by two consecutive quarters of a decline in economic activity.
The last time South Africa had experienced a recession was during 2008-2009 global financial crisis, which saw three consecutive quarters of economic decline.
Stats SA, which is the country’s statistics authority, said the drop in GDP was largely attributed to agriculture production which fell by 29,2% in the second quarter of this year, after a 33,6% plunge in the first quarter of 2018.
“This [decrease in agriculture] was largely driven by a decline in the production of field crops and horticultural products,” said Stats SA.
Stats SA added that: “Continued drought conditions in Western Cape and a severe hailstorm in Mpumalanga, resulting in extensive crop damage, also placed additional pressure on production in the second quarter.”
The South African government has since moved to allay fears over the recession and said it would be working on a plan to help revitalise the economy.
Thabo Baloyi
t.baloyi@politicalanalysis.co.za
