The rand is trading at new lows as the coronavirus continues its spread across the US and Europe.
Investors piled into haven assets as the greenbacks flew against emerging market currencies including the rand according to the Bloomberg. There is fear among investors that Covid-19 will push the economies into a freefall.
As the market processes the implications of a continued economic downturn and job losses, the dollar is rallying on haven demand according to Christopher Wong a senior foreign exchange strategist from Malayan Banking Bhd. Currencies that are susceptible to capital outflows and currencies that were favourite carry trades will start to feel fresh selling pressure.
Treasury partner at Peregrine Treasury Solutions, Bianca Botes has noted that the measures to contain the spread of Covid-19 have intensified, which will have a further knock on the global economy. Flights have been cancelled and lockdowns in a number of countries have intensified if an effort to stop the spread.
There are still many questions looming over how the coronavirus will impact the economy, which in the fourth quarter slipped into a technical recession.
On Friday, the country could be losing its last investment grade credit rating from Moody’s. If this happens then it could lead to heavy outflows, which will batter the rand even further.
At the moment the rand is trading at new lows. The dollar/rand is trading at R17.75, the pound/rand is at R20.69 and the euro/rand is at R19.07.
Article Source: https://businesstech.co.za/news/banking/383863/rand-reaches-fresh-lows-as-coronavirus-continues-rapid-spread/