BREAKING: Rand breaches R19/$ mark on Thursday

The rand broke through the R19/$ level on Thursday for the first time since April 2020.

BREAKING – THE RAND LAST TRADED AT THESE LEVELS IN APRIL 2020

According to a report by News24 Business, the local currency last traded at these levels during the height of pandemic-related market panic in April 2020 and may now be on a march to break through its worst level ever (R19.26/$).

The report furthermore stated that the rand had lost 17% against the dollar over the last year.

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THE RAND IS IN A FRAGILE STATE, WITH LOAD SHEDDING WEIGHING ON THE LOCAL ECONOMY

Bianca Botes, director at Citadel Global, said the rand is in a fragile state, with local factors, in particular load shedding, weighing on the local economy and currency.

“Rand weakness is expected to continue in the short term,”

she said.

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The rand had been stuck between R18 and R18.50 for about a month, then weakened after news that load shedding would remain at higher levels indefinitely.

‘LOAD SHEDDING WOULD REDUCE ECONOMIC GROWTH BY 2% THIS YEAR’

Earlier this week, SA Reserve Bank governor Lesetja Kganyago warned that load shedding would reduce economic growth by 2% this year.

The Reserve Bank economy now forecasts growth of 0.2% this year and, to average, 1.0% in the following two years.

THE ECONOMY IS AT RISK OF STAGNATION WITH SEVERE BOTTLENECKS OVER IN INFRASTRUCTURE

He was speaking at the University of Johannesburg.

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Earlier this week, the chief emerging-market strategist at SEB AB in Stockholm, Erik Meyersson, told the publication that the power crisis and the associated load shedding means the economy is at risk of stagnation with severe bottlenecks overall in infrastructure and through supply chains.

“Add to this some recent sluggish high-frequency statistics, an acceleration in consumer price inflation, and investors will likely have cause to worry about the near-term economic prospects in South Africa,”

Meyersson said.

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