The rand has regained strength putting South Africa’s economy back on top as Africa’s largest economy in dollar terms, reports Fin24.
South Africa has been at number two for more than two years after losing its position to Nigeria.
The rand gained 1% to R13.2805/$ at 16:03 in Johannesburg on Wednesday. The naira weakened 2.7% to 320 per dollar.
Based on gross domestic product at the end of 2015 published by the International Monetary Fund, the size of South Africa’s economy is $301bn at the rand’s current exchange rate, while Nigeria’s GDP is $296bn. That’s after the rand gained more than 16% against the dollar since the start of 2016, and Nigeria’s naira lost more than a third of its value after the central bank removed a currency peg in June.
The South African rand rallied as investors turned to emerging markets with liquid capital markets to seek returns after Britain voted to leave the European Union on June 23, even as the central bank forecast the economy won’t expand this year and the nation risks losing its investment-grade credit rating.
In Nigeria, investors didn’t flock to buy naira-based assets after authorities removed the peg of 197-199 naira per dollar. The Central Bank of Nigeria raised its benchmark interest rate to a record in July to lure foreign money, even as the IMF forecast the economy will contract 1.8% this year.
Nigeria was assessed as the continent’s largest economy in April 2014 when authorities in the West African nation overhauled their GDP data for the first time in two decades.