JOHANNESBURG - The rand's turmoil reached another level on Wednesday afternoon after it breached the R17.00/$.
According to Bianca Botes, Treasury Partner at Peregrine Treasury Solutions, the rand breached R17.00/$ with ease as the sell-off on the back of the Covid-19 virus pandemic continues to wreak havoc across financial markets.
"As the world braces for the anticipated global economic fallout of the pandemic, the continued sell-off also saw bond yields skyrocket, as investors unloaded South African and other emerging market assets in a bid to de-risk their holdings," Botes said.
Earlier today, annual inflation rate rose above the midpoint of the central bank’s target range for the first time in 15 months in February driven by higher fuel prices.
Consumer prices increased 4.6% from a year earlier compared with 4.5% in January, Pretoria-based Statistics South Africa said Wednesday in a statement on its website.
The median estimate of 16 economists in a Bloomberg survey was 4.5%. Prices rose 1% from January, the highest monthly rate since February 2017.
The uptick is unlikely to deter the central bank from cutting the benchmark interest rate on Thursday. More than half of the 21 economists in a Bloomberg survey predict a 50 basis-point reduction. Bets on easing increased after President Cyril Ramaphosa declared a national state of disaster over the coronavirus pandemic and the U.S. Federal Reserve lowered its main rate to almost zero.
Oil prices plunged below $25 a barrel for the first time in almost 18 years after Saudi Arabia made another shock-and-awe attack in its price war with Russia, vowing to keep production at a record high “over the coming months”.
Futures in New York fell as much as 9.1 percent to $24.49 a barrel, the lowest since June 2002. The last time crude traded near that level was when severe acute respiratory syndrome (SARS) hit Asia. The price war between key producers continued to deepen as Saudi Arabia said it would pump about 12.3 million barrels a day for the coming months.