CAPE TOWN – So the rand party is over… The domestic currency yesterday took a pounding like never before, tanking more than 50c in less than 36 hours and crashing through the R14 mark to R14.15 a dollar – it’s lowest in six weeks.
Analysts said the rand and other emerging market currencies were on the back foot due to geopolitical concerns and the negative impact of the US-China trade spat on global growth, with Turkey’s lira and Russia’s rouble being the hardest hit.
US President Donald Trump tweeted that he had authourised a doubling of tariffs on steel and aluminium from Turkey. He said levies on steel would be 50 percent and aluminium 20 percent, sending the lira tumbling as much as 14 percent against the greenback.
Dynamic Outcomes head market analyst and director James Paynter said a near 70c move since the low for the week on Tuesday was scary stuff. “There is surely going to be more volatility and action… and I suggest you keep an eye on the market over the next few days.”
At 5pm the domestic currency was bid 47c weaker than Wednesday’s same time bid at R14.05 a dollar. Against the pound sterling the rand tanked 46 to R17.94 and to the euro, the currency weakened 34c to R16.06.
Peregrine Treasury Solutions corporate treasury manager, Bianca Botes, said emerging markets had no chance of weathering the storm brought on by the dollar as it rapidly approached its strongest level in 13 months against a basket of currencies.
“The Russian rouble and Turkish lira both suffered significant losses during trade on Thursday, while the euro and pound both traded softer against the greenback during the same session.
“The rand is certainly on the back foot as the dollar continues to squeeze emerging market currencies,” said Botes.
TreasuryONE director and head of dealing Wichard Cilliers suggested that we keep a close eye on the greenback’s developments. “Geopolitical tensions between the US and other countries are setting the tone for markets, with China responding to the Trump administration’s latest trade war volley with additional tariffs of its own.”
JSE stocks were also dragged into negative territory with the blue-chip Top40 index declining 0.07 percent to 51 577.23 points, while the broader all share index gave up 0.14 percent to 57 703.02 points.
The biggest losers among major movers were Vodacom, which dropped 4.84 percent to R126.94 followed by MMI Holdings, which declined 4.64 percent to R16.23. Imperial declined 4.52 percent to R200.88, while Barloworld fell 4.1 percent to R126.71 and Standard Bank Group gave up 4.01 percent to end the day at R188.04.
Leading gains were AngloGold Ashanti, which increased 6 percent to R120.48 followed by Bidcorp, which gained 3.57 percent to R283.63. South32 ticked up 3.41 percent to R37.02, while Capco added 3.37 percent to R47.59 and Anglo American Platinum was 3.21 percent higher to end the day at R423.66.