The rand gathered strength in the course of the week, but rather anaemically
The unprecedented stimulus by governments and central banks across the globe also showed little signs of calming investors spooked by the prospect of a prolonged global recession due to the pandemic.
The coronavirus is expected to have a significant knock on economic growth of Africa’s three largest economies, including South Africa, as it weighs in on tourism, exports and overall productivity.
The local currency was trading 0.25percent weaker at R17.40 to the dollar at 5pm after shedding off a two-session rally which had driven it to its firmest since Friday at R17.19 against the greenback.
Over the last seven days, the rand has appreciated by 4.68 percent.
It had depreciated by 6.2percent last week and nearly touched R18 to the dollar as investors fled to stronger currencies like the dollar and the Yen.
But yesterday the dollar was down against the euro, the yen and the pound following the publication of the initial jobless numbers which showed that a record 3.3million people in the US had filed for unemployment due to the abrupt economic slowdown.
TreasuryONE’s Andre Botha said the rand had somewhat gathered strength on the weakness of the dollar this week.
Botha said the $2trillion stimulus package approved by the US government could help risky assets in the next couple of days, adding that the rand in normal circumstances should be on the frontline with news like this.
“As we enter the final day before the 21-day lockdown the rand clawed back some of its losses in overnight trade, trading in the mid-R17.20s at one stage, but has drifted out in the Asian session,” Botha said.
“Some of the rand strength was due to a US dollar trading a little bit weaker against the euro.”
Yesterday, the US Senate approved fiscal stimulus legislation worth $2trln to help sustain the American economy during the coronavirus pandemic.
Ricardo Evangelista, a senior analyst at ActivTrades, said: “It is interesting to note that the dollar’s weakness is occurring despite the White House and Congress having reached an agreement on an economic aid package worth $2trln, reinforcing the idea that during these interesting times the virus is setting the agenda, not policymakers.”
The JSE rallied as the All Share Index rose 4.56 percent to 45 251 points while the Top40 Index was 4.45 percent higher to 68 733 points.
Meanwhile, oil prices attempted to rebound earlier but the price remained drowned by growing expectation of a huge oversupply.
The Brent crude was 0.18 percent higher to $27.56 per barrel at 5pm.
Carlo Alberto de Casa, the chief analyst at ActivTrade, said the combination of coronavirus and the failed Opec+ deal was putting the barrel in an extremely dangerous situation.
“Technically, the first key resistance area has now been moved to $25, on the peak reached yesterday, while $23-$23.20 is an interesting area of support which is stopping further declines,” De Casa said.
“However, any fall below this zone could generate renewed selling momentum.”
Gold also recouped some losses as it was 0.73percent higher to $1628.80 (R28326.20) by 5pm.