Things will only get worse before they get better, and it’s a mantra the rand swears by. Our exchange rate to the dollar on Monday is a horror-show.
A tragic spell for the rand and it’s performance against the US dollar entered new territory overnight on Sunday. After setting a host of ‘worst-ever’ performances in March, we ended up with another infamous first: ZAR’s exchange rate plunged past R18 to the dollar.
Reaching R18.03, it sets a new lowest-ever value against the greenback. This is thanks in part to the ratings downgrade implemented by Moody’s, reducing South Africa’s investment grade to “junk”. The markets continue to feel the strain, as billions of citizens across the world get accustomed to lockdown conditions.
Billions of rand have been pumped into economic measures to try and prop our businesses up. But long before coronavirus, South Africa had taken a hiding. The issues of load shedding, low growth forecasts and a poor exchange rate had blighted our economy for years – the COVID-19 pandemic has only compounded our existing misery.
However, there was the lightest of light relief on Monday morning. The rand fell back to R17.90 against the dollar, as assistance from the Chinese markets – brought on by an interest rate cut – helped ZAR claw back a fraction of its losses. Things don’t look too clever against the British Pound or the Euro, however:
#Rand– Monday 30 March 2020- 7:40am— POWER987News (@POWER987News) March 30, 2020
The miserable financial performance and exchange rate has pressured finance minister Tito Mboweni into considering an approach towards the International Monetary Fund (IMF).
The move would allow South Africa to borrow large sums of money, to shore-up the war-chest needed in the fight against coronavirus. However, such lending from the global firm would only serve as a short-term fix for Mzansi – but beggars cannot be choosers.