Lack of clarity on lockdown restrictions pushes rand down
The rand was weaker on Thursday after a critical assessment about the effect of Covid-19 from the head of the US Federal Reserve dashed hopes for a quick recovery, and confusion around SA easing its lockdown restriction weighed on investor sentiment.
US Federal Reserve chair Jerome Powell said the US economy faced unprecedented risks. Powell also pushed against the prospects of interest rates in the US going negative, saying instead that additional government stimulus is needed.
“Yesterday, Fed chair Jerome Powell ended speculation of potential negative US interest rates and indicated that the US economy would need additional fiscal stimulus rather than more monetary measures. The dollar took advantage of this, gaining against all major currencies, while wiping out recent emerging-market currency gains,” Peregrine Treasury Solutions executive director Bianca Botes said in a note.
The rand was on track for its fourth day of losses, weakening to an intraday worst of R18.5988/$, according to In front data. At 11.33am, it had weakened 0.17% to R18.5557/$, 0.30% to R20.0513/€ and 0.37% to R22.6883/£. The euro was little changed at $1.0808.
The rand has lost 32% against the dollar so far in 2020, as the world battles with Covid-19 and its effect on emerging markets.
On Wednesday evening, President Cyril Ramaphosa said lockdown regulations could be eased by the end of May, though not in the hardest-hit areas, which are also likely to be SA’s most densely populated — and economically important cities.
Source: businesslive.co.za
