South African rand weakens on virus concerns; focus shifts to rate decision
CAPE TOWN - South Africa’s rand weakened against the dollar on Monday as the deepening coronavirus crisis roiled financial markets, with focus shifting to the central bank interest rate decision due later in the week.
At 08:50am (Local time), the rand traded at 16.4700 per dollar, 1.94% weaker than its close on Friday.
South African president Cyril Ramaphosa declared a national state of disaster on Sunday as he announced a range of measures to contain a COVID-19 outbreak that has infected 61 people in the country.
The South African Reserve Bank (SARB) is expected to cut interest rates on Thursday, but the easing is likely to be less aggressively than other global central banks trying to mitigate damage from the virus outbreak.
The U.S. Federal Reserve cut interest rates to near zero on Sunday in another emergency move to help shore up the U.S. economy amid the rapidly escalating pandemic.
“As we await the SARB’s decision, don’t be surprised by continued volatility and weakness in domestic equities and the rand, which will be riding the dizzying waves of global market sentiment, as they react to further news on the spread of the virus, the impact on the global economy and further policy announcements,” said Siobhan Redford, analyst at Rand Merchant Bank, in a note.
Markets will also focus on February consumer price inflation figures and January retail sales numbers, both due on Wednesday.
In fixed income, the yield on the 10-year government bond was up 3 basis points at 10.005%.