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Rand pushes past 14 to dollar as Turkey woes weigh on currency

Investors are in risk-off mode.

South Africa’s rand weakened beyond 14 against the US dollar for the first time since a credit downgrade in November as Turkey’s economic crisis sent investors fleeing from emerging-market assets.

The rand extended its drop after US President Donald Trump announced higher tariffs on Turkish steel and aluminum imports. The move came on the heels of an address by Turkish President Recep Tayyip Erdogan that failed to reassure global markets.

“The rand has been caught up in the maelstrom,” said Per Hammarlund, chief emerging-market strategist at SEB SE in Stockholm.

The rand’s slump on Friday took it to levels last seen during the final months of Jacob Zuma’s presidency, when the nation’s rating was cut by S&P Global Ratings. The currency initially surged after the election of his rival, Cyril Ramaphosa, who won over investors with pledges to weed out corruption and reinvigorate the economy.

“This time around, the rand is particularly vulnerable because of the Ramaphosa euphoria,” said Hammarlund, who predicted the currency will hit 14.50 in the short term.

Investors are turning against emerging markets as the rising prospect of a prolonged trade war compounds a backdrop characterised by a more hawkish Federal Reserve and European Central Bank. In South Africa, uncertainty about the ruling party’s policies on land and mining has also contributed to the currency’s 12% drop so far this year.

The rand was at 14.0714 per US dollar by 4:09 p.m. in Johannesburg, the weakest on a closing basis since Nov 24, when S&P lowered South Africa’s local-currency rating one step to a notch below investment grade. The yield on government rand-bonds due December 2026 rose 19 basis points to 8.87%.

© 2018 Bloomberg 

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The headline is in the tail: “In South Africa, uncertainty about the ruling party’s policies on land and mining has also contributed to the currency’s 12% drop so far this year.”

Wouldn’t you love that to be the reason just so you don’t have to return the land that you received illegally from apartheid government

1998 defaults again…interest rates 25%…hopefully not again.

Only ones RECEIVING land is the poor…the rest have been paying or are someone telling you lies about history.

Shaokhan, i must say i’ve never met someone who ‘received’ land, without having to buy it. I guess that must have been before my time.

I disagree with all 3 of you.

1) They are not the ruling party, I am no bodies slave. They are the governing party. However I do agree that the land issue and government uncertainty is the main contributor.

2) I did not steal any land or anything, the people that did are now dead so instead of trying divide the pie that feeds why not grow it, why not make a compelling case for people who have skill money and love for the country to help?

3) The media are nothing more than glorified opinionisers who are incentivised by corporate elites pushing their agendas and finding support for their point of view.

Here is my reason:
Like most pre election periods which occur most countries experience volatility due to uncertainties arising from potential changes.
South Africa has for the past 24 years had a centre leftists mixed economy stance which if anything has proved to be a failure at best. No new 14 or 10 point plan will sway international money, we just have way to much politics and not enough production to be anything more than a cash burner.

The rand will be stable at a range of 17.50 to 20.00 a dollar.

The government is too big, they have too many fires that need to be put out and they do not have the capacity to make things work. From SAA to Eskom and municipalities it is blatant theft, incompetence and greed.

Agreed. But as importantly we need to accept that we are a very poor country. Minimal innovation, mining unprofitable, aagriculture under attack, poor education, dudumbest in maths on the planet, left wing government, broke SOE S , crime and corruption, no growth.

Zar heading for your range. Watch food and fuel price inflation. Terrible situation.

SAM The Taxman,
How long before S.A. asked the IMF for a bailout?

Fyi if you got BTC yesterday you would have been about 9% better off than today.

Plus the $ is going to tank!

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