RAND AND BOURSE RETREAT
THE RAND weakened yesterday as another bout of risk aversion dragged emerging market currencies lower, with investors fretting over the impact of the coronavirus and opting for safe-haven assets.
At 5pm, the rand bid at R16.1250 to the dollar, 7 cents softer than at the same time on Tuesday, once again crossing the key technical threshold of R16 that traders have used to gauge likely direction of the rand’s moves.
Since Monday’s sharp fall to R17, the rand has managed to claw back some ground, but ongoing uncertainty about the effectiveness of measures taken by central banks globally to limit the coronavirus has kept volatility elevated.
News that state power firm Eskom would cut up to 4 000 megawatts of electricity from the national grid, partly due to faults at its Koeberg nuclear plant, has also rekindled bearish bets on the local unit.
“Although a degree of calm has returned to the world’s financial markets, there are various factors that could change this instantly,” Nedbank’s Reezwana Sumad said in a note.
“Locally, the rand remains exceptionally vulnerable. Any strength has been limited and moves to the topside have been more extreme, exacerbated by the persistent woeful performance of the electricity utility.”
Stocks fell, as a drop in oil prices hit chemical and energy firm Sasol.
The JSE Top40 index was down 0.82 percent to 43 891.49 points while the broader all share fell 0.79 percent to 49 074.09 points.
Sasol was the biggest decliner, sitting at the bottom of both indices, down 26.44 percent to end the day at R52.72.
Oil prices fell yesterday after Saudi Arabia and the United Arab Emirates announced plans to boost production capacity and Opec and the US Energy Information Administration cut oil demand forecasts because of the coronavirus.
In fixed income, the yield on the benchmark 2030 government issue was up 6 basis points to 9.26 percent. I Reuters