RAND TAKES A HAMMERING

THE RAND was on track for its biggest daily fall since November 2016 yesterday, as global investors dumped riskier assets and dismal domestic data drove home the economic impact of the Covid-19 pandemic.

At 5pm, the rand bid at R17.05 to the dollar, 45 cents softer than at the same time on Wednesday.

The rand is seen by some as a proxy for emerging market risk, so it tends to swing wildly at times of market volatility.

And yesterday was a brutal day for global markets, after the US Federal Reserve painted a bleak picture of the health of the world’s biggest economy and investors worried about new coronavirus infections as lockdowns aimed at curbing the virus ease.

The decline of the rand by more than 3 percent against the dollar was steeper than for other emerging market units.

The SA Reserve Bank has cut rates by 275 basis points so far this year, to 3.75 percent.

The rand’s sharp move weaker, which took it above R17 to the dollar, marked a relapse for a currency that had gained some 11 percent against the dollar from the start of May to Wednesday’s close.

Mining data yesterday highlighted how SA’s strict lockdown crippled output in April, and manufacturing data showed the sector was in bad shape even before the lockdown.

The South African economy could contract by 7 percent this year, according to a central bank prediction.

On the local bourse, stocks slid for a fourth session this week, mirroring falls in global equities markets.

The JSE all share index closed down 0.7 percent at 53295.3 points, while the Top40 index fell 0.64 percent to 48892.12 points. Banks led decliners, with the banking index down 2 percent.