On Monday, the South Africa’s rand firmed back to below the key 15.00 per dollar mark, which is mostly on profit-taking and month-end positioning after a sustaining a steep slide triggered by the Wuhan coronavirus shaking the world, Reuters reveals.
At 0700 GMT the rand was 0.43 per cent firmer at 14.9650 per dollar, having ended at 15.0300 on Friday. The coronavirus dragged the currency to its weakest level in three months—traded at 14.4800 last Monday, which was 0.59 per cent lower than its New York Close on Friday, January 24.
Reuters reported that investors concerned about the spread of the coronavirus wiped more than $400 billion off the value of China’s stocks in the first trading session in two weeks after an extended Lunar New Year break as the death toll from the epidemic rose to 361.
READ:Coronavirus and the Implications for Emerging Markets
The rand has tumbled 5.2 per cent against the greenback since the beginning of the year, more than 4 per cent of those losses in the past week as a risk-off emerging market sell-off was accelerated by renewed signs the local economy remained weak.
The sharp fall in the rand after positive trade in December that saw the currency flirt with sub-14.00 levels has seen volatility measures spike, making holding the rand even tougher for investors to stomach.
Nedbank analyst Reezwana Sumad was quoted by Reuters saying that, “The rand has been in a steady decline as the spread of the coronavirus has seen markets exit risk assets in favor of safe havens. This scenario is likely to prevail until the spread of the virus is brought under control,”
Further, she added that, “Locally, the ongoing load-shedding scenario is exacerbating the negative outlook for the local unit.”
In addition, on Friday the state power firm Eskom resumed nationwide blackouts and said they would continue through the week as it carried out long-delayed maintenance on its creaking fleet of coal plants, threatening already slack consumer demand and business activity.
Bonds were steady, with the yield on the benchmark bond due in 2026 flat at 8.025 per cent.
READ:South African Rand sustains a serious shakedown over the past year
