Rand hit new all-time low COVID-19

Photo: Adobe Stock

Rand value for Monday 9 March: ZAR hits 40-year low after triple whammy

It’s all going spectacularly wrong for the rand value, and ZAR’s exchange rate against the US dollar has plunged to depths not yet seen in the 21st century.

Rand hit new all-time low COVID-19

Photo: Adobe Stock

South Africa’s currency has taken the mother of all tumbles on Monday morning, beginning the week in disastrous fashion. The rand value for Monday 9 March is down 8% against the US dollar, marking one of the steepest drops in history. ZAR is also performing poorly against a number of international markets.

Why has ZAR dropped by so much?

The rand has been on the back foot since the middle of February. A conservative Budget Speech did little to ease fears about the potential for “ZAR-mageddon“, and the chickens have seemingly come home to roost today. There are a number of factors that have sparked this slump:

Coronavirus: The entire world is in a state of panic with the effect the deadly disease is having on the financial markets. Stocks are in freefall and major industries are being crippled by the outbreak.

Oil prices: This has been on the decline since the start of the year, and everything has been exacerbated in recent weeks. Both Russia and Saudi Arabia are at war over the issue, as the former refused to reduce oil production and the latter slashed their prices, sparking a bidding battle that has shocked the market.

Moody’s forecast amid load shedding: South Africa’s precarious position next to junk status is having a terrible impact on the rand value. Another round of load shedding – after multiple power cuts in 2020 – is putting our currency in a battle it can’t possible win right now.

Dollar-to-rand value exchange rate for Monday 9 March

On Monday morning, the rand value against the US dollar hurtled down to R16.75 – the worst level seen since 2016, and the weakest closing level witnessed in more than 40 years. You have to go back to January 1980 for a worse end-of-day figure against the American greenback.

Things aren’t looking much better elsewhere, either: The rand value dropped to R21.10 vs the pound overnight, and also fell under R18.50 vs the euro as well. Given that South Africa is one of the most export-reliant consumers of oil in the world, the decimation of our exchange rate was to be expected.