The rand has been on a roller-coaster ride, losing as much as 8% in early morning trade nearly touching R17/$ before bouncing back to R15.97/$ by noon.
The local unit started the day on the backfoot, at R15.76/$ before slumping to as low as R16.97/$ in early morning trade as investor fled to safe assets amid coronavirus fears and now more recently the oil price plunge of 30%.
Last week OPEC and its allies failed to reach an agreements on production. Russia, particularly, refused to cut production. The move saw Saudi Arabia cut prices to its lowest level in 20 years, AFP reported. Subsequently oil prices plummeted 30% overnight, the biggest one-day drop since the Gulf war.
Around noon, brent crude was down 20% to $36.06 per barrel. The rand had also made a recovery, by 12:05 the local unit had strengthened 2.05% to R15.97. Around 16:00 the rand was still around the same level at R15.98.
Trading specialist at Purple Group, Musa Makoni, said that the rand appeared to have stabilised after the panic mode of some investors cooled off. "When the Asian markets opened this morning, there was more panic than anything else. We saw investors go for safer currencies like the US dollar," he explained.
Wichard Cilliers, senior dealer at TreasuryONE, said that the rand was strengthening as there was more liquidity with most markets opening thoughout the day. "Liquidity is more readily available and there has been some profit taking on positions," he said.
In an emailed response to questions from Fin24, Paul Muller, treasury partner at Peregrine Treasury Solutions, said that the rand's apparent volatility was being driven by a risk-off environment.
"The coronavirus is not the only factor influencing markets at present, but also extreme oil price movements resulting from a spat between Russia and Saudi Arabia," Muller said.
"The collapse of the rand against all major currencies was totally exaggerated in thin after-hours trading and a correction was always on the cards this morning," Muller added. "Of all emerging market units, the rand and the Mexican peso were seen as the most oversold currencies," he said.
The rand could move towards R15.85 to the greenback today, barring any more risk-averse international events, Muller said.