Rand tum­bles against US dol­lar

Chronicle (Zimbabwe) - - Business -

PRE­TO­RIA. — The rand slid against the dol­lar yes­ter­day morn­ing, ex­tend­ing its sharp overnight losses af­ter the Trea­sury con­firmed the re­ceipt of a letter from the Hawks, ask­ing Fi­nance Min­is­ter Pravin Gord­han to present him­self to the Hawks to­day.

The rand tum­bled more than 3 per­cent against the green­back and weak­ened sub­stan­tially against both the euro and the pound, mark­ing a sharp re­ver­sal from the strength­en­ing trend that had been in place since at least the Brexit vote in June.

Re­newed rand weak­ness could put pres­sure on the Re­serve Bank’s mone­tary pol­icy com­mit­tee, which meets in Septem­ber to de­cide on in­ter­est rates.

A weaker rand stokes in­fla­tion, which may lead the Bank to in­crease rates even though it has fore­cast that the lo­cal econ­omy will stag­nate in 2016. Con­sumer in­fla­tion, which the Bank uses to de­cide on rates, has been out­side the tar­get band since at least De­cem­ber.

"The threat that Gord­han will no longer be able, or per­haps will­ing, to con­tinue in his po­si­tion is now real," Rand Mer­chant Bank cur­rency an­a­lyst John Cairns said.

"His po­si­tion would pre­sum­ably be un­ten­able if he is ac­tu­ally ar­rested — or at least an ar­rest would pro­vide a jus­ti­fi­ca­tion for his re­moval."

The rand was at R14,0988 against the dol­lar from R14,0007 at the pre­vi­ous close — Busi­ness­day.

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