Rand breaches R14/dollar for first time this year

The rand has dipped to its lowest level in nearly nine months, trading at R14.11 against the greenback by 15:56 on Friday, Bloomberg reported.

After opening at R13.71/$, the rand was 2.98% weaker by late afternoon, with Bloomberg reporting a flight from risk in markets weighed on emerging-market currencies. 

On Thursday, the rand lost over 2% against the dollar, weakening again in early trade on Friday. 

In a morning note on Friday, Adam Phillips, treasury specialist at Umkhulu Consulting, warned that the local currency might be approaching R14/$. This was mainly due to it being "pushed" lower by fellow emerging market currencies, he explained. 

At the same time, Bianca Botes, corporate treasury manager at Peregrine Treasury solutions, said in a morning note that the rand's fall was linked to dollar strength, saying the local currency was "on the back foot as the dollar continues to squeeze emerging market currencies".

Ahead of Thursday's public holiday, the rand was at around R13.30/$.

According to Bloomberg, Turkey’s economic crisis sent investors fleeing from emerging-market assets.

The rand extended its declines after President Donald Trump announced higher tariffs on Turkish steel and aluminum imports. The move came on the heels of an address by Turkish President Recep Tayyip Erdogan that failed to reassure global markets.

“The rand has been caught up in the maelstrom,” Per Hammarlund, chief emerging-markets strategist at SEB SE told Bloomberg.

“This time around, the rand is particularly vulnerable because of the Ramaphosa euphoria and subsequent concern over land redistribution without compensation. The trend in the dollar-rand cross is upward and will likely continue to R14.50/$ before slowing.”

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