Ouch! Rand plunges towards R14/$

Turkey has in the past few months to raised interest rates aggressively in an attempt to put a floor under the lira, which is the worst-performing emerging-market currency in 2018.

The rand weakened to within striking distance of the symbolic R14/$, putting it on track for its worst weekly decline in since mid-May, potentially dealing a blow to any relief from high fuel prices.

The local currency was under pressure from a strong dollar, which in turn received a boost from a weaker euro after Financial Times reported that the eurozone financial watchdog was concerned about the exposure of the some of the region’s big banks to Turkey.

The euro slid to its weakest level to the dollar in just more than a year, according to Iress data, putting further pressure on the rand, which acts a key variable in the outlook for inflation.

The Reserve Bank kept rates on hold in July, citing rising inflation.

“The risk dynamics are supportive of the rand at the moment,” ETM Analytics analyst Halen Bothma said. The sharp weakness in the rand reflects the risk of environment that has emerged because of the idiosyncratic challenges we have seen in Turkey and Russia.”

The Russian rouble hovered near its weakest point to the dollar in two years, after the US announced fresh sanctions on Thursday.

At 9.04am, the rand was at R13.8802 to the dollar, from R13.7070 at the US close on Thursday. It was at R15.9155 to the euro from R15.8015, and at R17.7505 to the pound from R17.5780.

– BusinessLIVE

Source link

More from Matthew Eileen

Noose tightens around Steinhoff

Banks exert control and multiple probes face shamed retailer Source link
Read More