Rand recovers after plunging to all-time low

The rand traded firmer against the dollar early on Thursday, recovering after falling to a record low the previous session, but investor confidence remained fragile as concerns over the economy linger.

At 0630 GMT, the rand traded at R18.11 per dollar, 0.6% firmer than its previous close. It weakened to an all-time low of R18.27 on Wednesday.

South Africa has imposed some of the toughest restrictions on the continent to try to contain the coronavirus outbreak, including deploying the army to support police during a 21-day lockdown that began on Friday.

The likely toll on an economy already in recession showed up in preliminary tax numbers, with 2019/20 collection R160 billion ($8.84 billion) below February’s Treasury estimates.

“Deeply indebted South Africa will carry the wounds of the COVID-19 shock for a longer period, given the upward pressure in spending related to containment efforts and the drag on revenue due to the slump in economic activity,” analysts at NKC African Economics said in a note.

Government bonds also firmed in early trade, with the yield on the 10-year instrument due in 2030 dipping 6 basis points to 11.010%.