JOHANNESBURG (Reuters) – South Africa’s rand fell more than 1 percent to a record low against the dollar on Thursday, weighed down by nagging concerns over sluggish domestic growth and the impact of slowing growth in China.

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COIN

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The rand fell to 14.0300 to the greenback at 1052 GMT, in thin trade as financial markets in South Africa were closed for a national holiday.

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South Africa’s Central Bank left interest rates unchanged as expected on Wednesday, citing a much better inflation outlook for this year and weak economic growth as some of the main reasons for its decision.

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The Bank revised its inflation forecast for this year lower to 4.7% from 5%, for next year to 6.2% from 6.1%, and for 2017 to 5.8% from 5.7%.

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A weak rand remained the main concern for the Bank, as it could drive inflation higher in future.

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“Risks to the inflation outlook are on the upside,” Reserve Bank governor Lesetja Kganyago said.

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The rand has depreciated by about 9% against the dollar since the last monetary policy committee meeting in July.

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Although SA would suffer weak economic growth, a recession was unlikely, Mr Kganyago said. The Bank’s monetary policy committee statement said an economic contraction was unlikely in the third quarter following a 1.3% decline in the second quarter.

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Moody’s on Wednesday expressed the same view as the governor, saying in a credit opinion note: “Despite weak indicators and depressed business confidence that continues to undermine investment prospects, we expect recession to be avoided this year,” Moody’s said.

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With Reuters

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