The South African rand got firmer against the dollar on Thursday, as it has recovered from its record fall the previous session, according to information from Reuters.
Earlier today at 0630GMT, the rand traded at 18.110 per dollar, 0.6 per cent firmer than its previous close. Hence, Reuters reported that investor confidence remained fragile as concerns over the economy linger.
The second-largest economy in Africa, which went into another recession in two years, is hurting from various economic scenarios including the ripple effect of the novel coronavirus (COVID-19), and the current power crisis.
South Africa has imposed some of the toughest restrictions on the continent to try to contain the pandemic that has already taken more than 170 lives and infected over 5,500 people. COVID-19 has killed 5 people in South Africa, infected more than 1,300 others.
The Southern African nation has rolled out various measures including deploying the army to support police during a 21-day lockdown that began on Friday.
According to Reuters, the likely toll on an economy already in recession showed up in preliminary tax numbers, with 2019/20 collection 160 billion rands ($8.84 billion) below February’s Treasury estimates.
“Deeply indebted South Africa will carry the wounds of the COVID-19 shock for a longer period, given the upward pressure in spending related to containment efforts and the drag on revenue due to the slump in economic activity,” analysts at NKC African Economics said in a note.
Government bonds also firmed in early trade, with the yield on the 10-year instrument due in 2030 dipping 6 basis points to 11.010 per cent