Written by Andrew England | From Financial Times

When South Africa was lumped with the so-called “fragile five” emerging countries last year, government officials protested loudly at what they saw as a pejorative label.

As emerging market currencies, including the rand, tumbled, South African officials deflected any sense of crisis. They argued the currency had been overvalued. And, unlike India, Brazil and Indonesia, which committed billions of dollars to prop up their currencies, South Africa ruled out an intervention.

Yet, after months peppered with bleak domestic economic news, the rand – one of the most liquid emerging markets currencies – is once again under heavy pressure, this week testing the five-year low it hit earlier this year.

In January, the rand crossed the symbolic R11 to the dollar, at one point hitting R11.395 against the greenback, the weakest since October 2008. Now, after a period of relative stability it has fallen again below the key mark, on Wednesday hitting a 7-month low of R11.194 against the dollar.

Over the past year, the rand has lost 13.1 per cent against the dollar, compared with a 9.5 per cent fall for the Brazilian real and 12.1 per cent for the Turkish lira. The Indonesian rupiah has fallen 6.3 per cent over the same period.

For some, the recent weakness is a case of déjà vu: the rand’s slide is blamed on largely the same factors as earlier this year. “Obviously there are internal reasons, but the starting point is really related to the global theme,” says Murat Toprak, a foreign exchange strategist at HSBC in London.

The rand’s weakness in 2013 and early this year was in large part blamed on the US Federal Reserve’s decision to begin tapering its “quantitative easing” programme. This time, dollar strength and expectations the US will move towards monetary “normalisation” – a rise in interest rates from historic lows – are seen as affecting the rand.

Read more at Financial Times