Rand weakens to all time low

THE South African Rand dropped to an all-time-low to 14.05 to the dollar on Thursday afternoon last week but struggled to R13.94 to a dollar yesterday.

The rand breached 12 to the dollar in the middle of the year and is yet to return to that level. The Rand used to trade at R5 to a dollar.

Similarly, in mid-September the Turkish Lira too sank to historic lows against the dollar. And on Wednesday the Brazilian real dropped to its own historic low – before rallying on Thursday.

“The rand remains engulfed by two major international headwinds, namely ongoing evidence of hard landing in China and repeated suggestions from the US Federal Reserve that US interest rates are likely to start going up by year-end,” said Keenan. “The fact that the rand weakened so sharply during Thursday’s domestic public holiday serves as a reminder that most rand trading activity actually takes place outside our borders.”

The impact of Thursday’s holiday on trade was exacerbated by weakening in other emerging markets and headlines about the US Federal Reserve and imminent interest rate hikes. A statement from the Federal Reserve chair, Janet Yellen, on Thursday suggested interest rates could be hiked before year-end caused a strengthening in the dollar while currencies in developing nations took a hit. The MSCI Emerging Market dipped on the day.

Last time around, the Reserve Bank put out a release after the dip to register its concern about excessive volatility, but also to reaffirm its commitment to the exchange rate of the rand being set by market forces.

Its position, however, did not mean it was completely indifferent to exchange rate movements and, “In the event of developments that threaten the orderly functioning of markets or that may have financial stability implications, the SARB may consider becoming involved in foreign exchange markets to ensure orderly market conditions,” the bank stated. The Reserve Bank has not released a statement to respond to the historic low the currency experienced on Thursday.

Categorized | Business

Comments are closed.

Our Sponsor

Jevic Japanese Auto Inspections

Social Widgets powered by AB-WebLog.com.