THE rand stumbled to a fresh five-year low against the dollar yesterday, falling alongside other emerging market currencies as investors bet the United States central bank will press on with cutting back stimulus.

The rand touched a low of R10,95 per dollar, a level last reached in October 2008, and was down nearly 0,7% from its New York close on Wednesday. It was trading at R10,912 per dollar early in the afternoon.

Local economists have warned the continuing weakness of the rand will cause price hikes of major commodities such as maize, wheat and fuel, and may force the Reserve Bank to raise interest rates later this year.

Government bonds fell in tandem with the currency, pushing the yield on the 2026 benchmark 5,5 basis points higher to 8,395%, its highest since early December.

The yield for the shorter-dated 2015 instrument added six basis points to 6,27%.

The rand has already weakened nearly five percent against the dollar in the first two weeks of the New Year, after losing a quarter of its value in 2013, as a series of strikes in the manufacturing and mining sectors hit sentiment.

South Africa’s budget and current account deficits, at about five percent and nearly seven percent of GDP respectively, also make the currency more vulnerable than most emerging market peers during periods of global risk aversion.