The rand weakened to above the R15/$ level on Friday morning amid continued concerns over the economic impact of coronavirus and heightened scrutiny of South Africa ahead of President Cyril Ramapahosa's upcoming State of the Nation address.
At 11:45, the local currency was trading at R15.02 to the greenback, after hovering near that level for much of the morning.
This fall came in spite spite what Bianca Botes of Peregrine Treasury Solutions called "sporadic incidents of positive news", including ramped-up efforts to develop a vaccine for the virus and an announcement by the Chinese government that it intended to inject $171bn into the economy in a bid to protect it from the coronavirus slump.
"Historically, if you look at trading capacity on a Friday, people do de-risk their portfolios, so emerging markets do come under pressure – if you look at what happened last Friday, we pushed above the R15 mark and came back on Monday," she told Fin24.
But, she added, despite a slight recovery for emerging markets during the week thanks to a restoration of short-term risk appetite, small positive developments do not "take away the underlying risk of what the coronavirus, under complete lockdown, is going to do to the Chinese economy, and as a result to other emerging markets.
"It's going to add pressure, and a significant decline in Chinese GDP," she said, adding that it was also unclear whether a return to stability would occur within the next month, the next quarter, or longer.
On the local front, Botes noted that uncertainty ahead of the State of the Nation Address on February 13 and Finance Minister Tito Mboweni's Budget speech on February 26 could be taking a toll, as ailing state-owned enterprises place increased pressure on the fiscus.
"After [the ANC National Executive Committee] lekgotla, there's a lot of attention being paid to South African noise at the moment.
"Normally we don't see that the markets respond too much to local events – only about 20% of the currency activity is attributed to local events – but as we move closer to the SONA, and as markets are looking at some indications of what the Budget is going to look like, we need to establish what policy is going to be, and we will see markets focusing more and more on policy outcomes from the ruling party," she said.
This effect would be amplified by the "very thin thread" that state-owned airline South African Airways is hanging on, she added. SAA is in business rescue. The implications for the fiscus and tax base would also play a role, "because bailouts must be funded somewhere", she added.
The rand had been the worst performing currency against the dollar in January, Fin24 previously reported.
Meanwhile Andre Botha, senior currency dealer at TreasuryONE, noted earlier that US markets were expected to remain strong. US non-farms payroll data – due later on Friday – could also push the rand above the R15/$ level, he said.