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Rand hits new record low against pound

The currency depreciated to 20,10 to the pound earlier, but has since stabilised.

Picture: Christa Eybers/EWN.

JOHANNESBURG - The rand has hit a new record low against the pound trading at 20,10 earlier today but stabilising slightly this afternoon.

The local currency dropped to R20,10 cents to the British currency and is now around R12,78 to the dolla.

The local currency is also trading at 14-year lows to the dollar as emerging market currencies battle to stop losing ground.

Economists say a threat of a wage strike in the gold sector and power problems have damaged investor confidence.

Added to this, the devaluation of the Chinese yuan has had a direct impact on markets around the world.

Yesterday, China's central bank reassured investors that there was no reason for the currency to keep falling, but the yuan has continued to depreciate for three straight days.

Sources have told Reuters that some powerful voices in the government are pushing for an even deeper devaluation to help China's struggling exports.

A weak rand will have a direct bearing on fuel prices and possibly the repo rate, which is bad news for consumers.

There are concerns that the rand may remain under pressure over the next few months after hitting an all-time low against the pound earlier today.

The devaluation of the Chinese yuan, the possible strike in the gold sector and waning invested pound due to the power crisis have all taken their toll on the rand.

Nedbank economist Isaac Matshego said, "There's very little upside for the rand. We are sort of looking at the rand ending the year at between R12,70 and R12,80 against the US dollar."

A possible change US policy next month could also affect the rand, with emerging market currencies vulnerable.

Currencies in a number of countries including Russia and Brazil have also lost major ground with concern the situation may not improve significantly for some time.

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