The rand was a lot weaker on Wednesday morning, hobbled by a pick-up in the dollar against a basket of currencies, save for the yen.
The Turkish lira plumbed record lows to the greenback, stretching its recent run of declines, which reflected negatively on broad emerging-market assets.
The rand’s weakness coincided with local consumer inflation, which reaffirmed economists’ view that prices may have hit a low point in the cycle.
Though coming in slightly below consensus, inflation nonetheless pushed up to an annul rate of 4.5% in April, from a seven-year low of 3.8% in March.
Several factors would have conspired to push up prices in April, including the effects of high fuel prices and value added tax (VAT).
With the rand remaining volatile and oil prices elevated, the Reserve Bank could upwardly revise its inflation forecast when its monetary policy committee ends its scheduled meeting on Thursday, where it is expected to keep interest rates on hold.
The rand has been vulnerable to swings in global markets, with expectations of higher interest rates in the US supporting the dollar, leading to capital outflows from emerging markets.
Foreigners were net sellers of local bonds and equities worth just more than R20bn last week, according to the JSE’s weekly data.
“Matters just continue to go from bad to worse for the Turkish Lira. The latest decline, standing at 8% for the week at time of writing has dragged a number of different emerging-market currencies lower against the dollar so far on Wednesday,” said Jameel Ahmad, global head of currency strategy and market sesearch at FXTM.
“This includes the … rand, which is down nearly 1% already for the day and has been negatively influenced by a lack of investors seeking yielding assets as a result of the currency crisis in Turkey.”
At 10.14am, the rand was at R12.6415 to the dollar from R12.5703, R14.8125 to the euro from R14.8046 and R16.9262 to the pound from R16.8860.
The euro was at $1.1717, from $1.1778.