South Africa’s rand has gained a slightly against the dollar early on Tuesday, after beginning the week on Monday on the back foot as investors calculated the economic impact of the coronavirus, which left stocks in Asia abandoned by investors.
Reuters reported that Africa’s most diversified economy currency firmed after hitting a more than six-week low in the previous session, and yet the coronavirus still weighs on the economic outlook.
At 0640 GMT, the rand traded at 14.5800 per dollar, 0.17 per cent than its previous close, while on Monday, at 0702 GMT the rand traded at 14.4800 versus the dollar, which is 0.59 per cent lower than its New York close on Friday 24th.
On the other hand, Reuters reported that the rand slipped to 14.6570 per dollar on Monday, its weakest since Dec. 12, with the selloff largely driven by investors dumping emerging-market assets.
Nedbank analysts wrote in a note the risk-off scenario was “likely to continue until the coronavirus is brought under control.”
Global markets have tumbled recently on fears the virus could do further damage to China’s already-weakened economy, an engine of global growth.
Also, the rand is the most fragile among its emerging market peers as investors are also cautious about South Africa’s poor economic outlook and possible downgrade to junk by Moody’s Analytics.
In addition, South Africa’s Finance Minister Tito Mboweni gives his budget speech on Feb. 26, with Moody’s — the last of the top three agencies to still rate the country at an investment level — set to review its credit rating a week later.
In fixed income, the yield on the benchmark government bond was down a single basis point to 8.135 per cent.
Still investors are assessing the economic long-term-economic-outcome after the coronavirus epidemic, with a death toll of about 106 people.