Rand drops below R14 to the dollar

The South African currency plummeted to new lows on Friday as government bonds weakened amid global trade tensions and slides in the Russian ruble and Turkish lira, which combined to dampen global market enthusiasm towards emerging market assets.

The US-China trade spat has had a negative impact on global growth, leaving the rand and other emerging market currencies on the back foot.

Turkey’s lira and the Russian rouble were hit hardest, according to analysts, with the lira hitting a new record low against the US dollar on Friday.

Turkey sent a delegation to Washington to discuss the trade crisis, but returned with no clear solution, sparking concerns of a widening rift between the nation and the US.

Meanwhile, Washington’s decision to impose new sanctions on Moscow led to the ruble sliding to a two-year low.

Late on Friday, the rand was trading at more than R14 to the dollar, its worst point since a credit downgrade in November.

The slump took it back to levels last seen during the final months of Jacob Zuma’s presidency, when the sovereign rating was cut by S&P Global Ratings. 

Per Hammarlund, the chief emerging market strategist at SEB SE in Stockholm, predicted to Bloomberg that the local currency would hit 14.50 to the dollar in the short term.

For more news your way, download The Citizen’s app for iOS and Android.