The rand weakened again early on Tuesday following a sharp plunge in the previous session when fears of a second wave of global cornavirus infections triggered a worldwide selloff of riskier assets.
At 0630 GMT the rand was 0.69% weaker at R16.89 per dollar, close to Monday’s one-and-a-half week bottom of R16.94.
The rand opened the week at R16.30, not far off its best level in six months, but then tumbled more than 3% on Monday, the most among emerging market currencies, as the threat of new pandemic-related lockdowns in the UK and other countries in Europe prompted concerns about the global recovery.
Local sentiment was worsened by the Treasury committing to another bailout for ailing state carrier South African Airways. The airline’s business rescue administrators said on Friday another R10.5 billion would be provided to the carrier.
“Unfortunately, what transpired this weekend was a double whammy of serious concerns about the second wave of virus infections hitting the Northern Hemisphere combined with another bout of South Africa shooting itself in the foot again,” said the chief trader at Standard Bank Warrick Butler.
Traders have warned that South Africa’s fiscal woes, with debt threatening to break the 100% of gross domestic product (GDP) mark, pose a serious risk to investment and sentiment.
The currency is however expected to steady in the session if investors book profits on the dollar’s rally to six-week highs.
Bonds were also weaker, with the yield on benchmark 2030 government paper up 13 basis points to 9.44%.