Rand firms following slide on virus fears

South Africa’s rand firmed to below the key 15.00 per dollar mark on Monday, rebounding after a steep slide triggered by the coronavirus outbreak sent the currency to its weakest level in three months.

The stock market closed lower, in line with weakness in global stocks, amid fears the coronavirus epidemic would hit Chinese demand.

At 1500 GMT the rand was 1.18% firmer at 14.85 per dollar, having closed at 15.03 on Friday.

Investors concerned about the spread of the coronavirus wiped more than $400 billion off the value of China’s stocks in the first trading session in two weeks, after an extended Lunar New Year holiday break. The death toll from the outbreak has exceeded 360 people.

The rand has tumbled 5.2% against the greenback since the beginning of the year, with more than 4% of those losses in the past week, also hit by signs of weakness in the local economy.

The sharp fall in the rand after positive trading in December that saw the currency flirt with sub-14.00 levels has seen volatility measures spike, making holding the rand even tougher for investors.

“The rand has been in a steady decline as the spread of the coronavirus has seen markets exit risk assets in favour of safe havens. This scenario is likely to prevail until the spread of the virus is brought under control,” Nedbank analyst Reezwana Sumad said in a note.

“Locally, the ongoing load-shedding scenario is exacerbating the negative outlook.”

State power firm Eskom on Friday resumed nationwide load-shedding, or blackouts, and said they would continue through the week as it carried out long-delayed maintenance on its creaking fleet of coal plants, threatening already slack consumer demand and business activity.

On the stock market, the Top-40 index was down 0.34% while the broader all-share edged down 0.46%.

Bonds firmed, with the yield on the benchmark bond due in 2026 falling 7 basis points to 7.95%.