Picture: REUTERS
Picture: REUTERS

THE rand weakened to its lowest level against the dollar in almost four years on Wednesday as uncertainty in labour markets continued to rattle foreign investors.

Factors such as domestic risk and uncertainty in the labour market, including concerns relating to large-scale strikes later in the year, were driving the downward trend, said Michael Keenan, currency specialist at Absa Capital. "Foreigners might be spooked."

The currency lost over 1.6% to just over 9.0 to the dollar — its lowest level against the US currency since April 2009.

At 5.30pm local time the rand was trading at R9.0010/$. It was the worst-performing emerging-market currency on the day, experiencing its worst fall since October 5.

"In four out of the past five years we’ve seen a decline in the rand against the dollar in January," said Ockert van Niekerk, head of trading at PSG. "Oil companies and other bigger corporates often get involved and do their forward hedging for the year."

South Africa’s consumer inflation figures for December were released on Wednesday, coming in at 5.7% year on year, in line with expectations.

However, "I don’t think it’s influenced the movements today," said Mr van Niekerk.

The Reserve Bank’s monetary policy committee has started its first meeting for the year, with an announcement on interest rates due on Thursday. Economists are not expecting a change.

The Bank is expected to be quite dovish, and the tone of the statement "will certainly influence traders", said Mr Keenan.