JOHANNESBURG - South Africa’s rand remained on the back foot on Wednesday after hitting a two-year low as the effects of dipping into recession dented investor risk sentiment.

At 7:05pm on Wednesday, the rand traded 0.77 percent weaker at 15.4725 versus the dollar, after hitting a low of 15.6925 earlier in the session.

A contraction of 0.7 percent in the second quarter announced on Tuesday pushed South Africa into recession for the first time since 2009, dealing a blow to President Cyril Ramaphosa’s efforts to revive the economy after a decade of stagnation.

Statistics South Africa also said the economic contraction in the first quarter was steeper than initially recorded, at 2.6 percent.

Tuesday’s GDP figures led many economists to cut their full-year growth forecasts for South Africa.

“South Africa’s fiscal challenges will remain a constraint on the economy for some years to come. We now forecast real economic growth of only 0.7 percent in 2018, previously 1.1 percent compared to 1.3 percent in 2017,” an NKC African Economics analyst said in a note.

Appetite for rand assets has also been dented by the financial turmoil in Turkey and Argentina and a growing threat of a spill over from a trade war between Washington and Beijing.

The yield on the benchmark rand-denominated government bond due in 2026 rose 2 basis points to 9.23 percent.

The bourse was led lower by banks, with the top 40 index was down 1.66 percent to 50,833 points, while the all share index closed 1.36 percent lower at 57,102.

The banking index fell 2.85 percent led by Nedbank which closed 5.01 percent down at 255 rand.

“Emerging markets are in contagion and the rand is quite weak. We still haven’t recovered from the GDP figures which were quite a surprise,” said Greg Davies, trader at Cratos Capital.

Market heavyweight Naspers fell 4.02 percent in tandem with Chinese gaming firm Tencent which was down 4.08 percent.

Steinhoff bucked the negative trend, rising 5.73 percent after former chief executive Markus Jooste’s appearance at a parliamentary inquiry, claiming no knowledge of any accounting irregularities at the time of his departure in December.

“I don’t think he said much to move the share price. I suppose since we have had no action towards Steinhoff or management at least the wheels of some sort of action are starting to move,” said Davies.