South Africa, Africa’s most diversified economy has taken a hard hit on its currency as investors grow increasingly anxious over the impact of the spread of corona virus in Africa.
According to a reuters report, investors are slowing down as they are calculating the economic impact of China’s spreading coronavirus outbreak.
According to Reuters, at 0702 GMT, the rand traded at 14.4800 versus the dollar, 0.59 per cent lower than its New York close on Friday.
The South African economy has sustained a rather serious shakedown over the past year, causing its business index to plummet, thus—reports show the sluggish outlook for the local economy added further strain on the currency on Monday.
Global Markets tumbled on Monday as investors grew increasingly anxious about the economic impact of the outbreak of coronavirus, which has taken more than 80 people’s lives.
Further, Reuters noted that a weak growth outlook for the South African economy also weighed on demand for rand assets, after the International Monetary Fund and South African Reserve Bank downgraded their growth predictions earlier this month.
In addition, NKC Economics gave a note regarding the state of the nation’s economy.
“The domestic situation will increasingly come to the fore as the February budget nears, with most analysts attempting to ascertain how Moody’s will receive the budget, with Moody’s set to make a call on the country’s final investment-grade rating in March,” NKC Economics said.
The rand is expected to trade in the rand of 14.35 to 14.55 rand to the dollar on Monday, NKC African Economics said.
Also, the South African government bonds weakened, with the yield on the benchmark instrument maturing in 2026 up 4 basis points to 8.135%. Stocks opened lower in early trade on Monday with the Johannesburg Stock Exchange’s (JSE) Top-40 index down 1.44% at 50,389 points