Wild swings make rand the most unpredictable currency once again

The rand is also climbing back up the implied volatility ladder.

After being overtaken by Turkey’s lira in May, the rand’s one-week implied volatility against the dollar is now a hair’s breadth away from regaining the top spot. Its expected price swings briefly surpassed the lira’s on November 28 before dropping back again.

The rand climbed to a three-year high against the dollar in February before giving up its gains to slump 13% in 2018 as domestic political turmoil, liquidity and debt problems at state-owned companies, and stagnant economic growth added to global headwinds. After falling 1.6% on Monday, it gained 0.5% on Tuesday to R14.3167/$ by 3.15pm in Johannesburg as reports showed mining and manufacturing output beat estimates in October.

Price swings will probably widen as trading volumes dry up toward year-end, according to Michelle Wohlberg, a fixed-income trader at FirstRand Bank in Johannesburg.

“December liquidity is officially here and with it comes the joys of a volatile market,” she said in a note to clients.

Bloomberg