Rand slumps to weakest level since 2020

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Photo: Elvira Wood
Photo: Elvira Wood
  • The rand has hit its weakest level against the dollar since 2020, as investors piled into safer assets.
  • But the local currency strengthened against the pound and the euro, which its lowest level since 2002.
  • Stock markets and world oil prices plunged Tuesday on mounting fears that major economies will slide into recession this year as inflation soars.


On Tuesday, the rand slumped to its weakest level against the dollar since 2020 as global investors took fright.

In early evening trading, the rand was trading at R16.58/$, more than a percent weaker than on Monday.

Rand/dollar exchange rate. Source: XE

The rand was stronger at R19.75 to the pound and R16.98 to the euro. The European currency slumped to its lowest level since 2002.

The euro fell as low as $1.0261, threatening a push towards dollar parity. The pound also slumped to a two-year low below $1.20.

Amid global risk aversion, foreign investors sold off the rand and other currencies, and piled into safer assets like the dollar.

Stock markets and world oil prices plunged on Tuesday on mounting fears that major economies would slide into recession this year as inflation soars.

Europe's main stock markets shed three percent heading into the close of trading, while benchmark crude contract, Brent North Sea, was down almost ten percent.

Wall Street indices were down almost 2% in early trading on Tuesday.

Markets dived as investors eyed aggressive interest rate hikes by the US Federal Reserve in its fight against inflation, in contrast with the European Central Bank, seen as planning more modest increases.

Meanwhile a key survey showed that economic growth in the eurozone floundered in June, hit by soaring consumer prices. S&P Global's closely-watched monthly purchasing managers' index (PMI), which measures corporate confidence, fell to 52.0 in June from 54.8 in May.

"Growing fears of a recession are hammering the euro lower, whilst the dollar is soaring on bets that the Fed will keep hiking rates aggressively to tame inflation," City Index analyst Fiona Cincotta told AFP. "Today's PMI data from Europe highlighted the risk of slowing growth at the end of the second quarter and raise the prospect of a contraction in activity in the coming months."

After reaching R14.58/$ in April, the rand has been steadily losing ground. In June, the currency lost almost 4% against the dollar.

Intensified load shedding – which hit Stage 6 for the first time since 2019 as an illegal strike hit Eskom – added to gloom in local markets. On Tuesday, Eskom inked a wage deal with unions, but the country’s power supply could still be disrupted for weeks.

- Fin24 and AFP

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