JOHANNESBURG – South Africa’s rand tumbled to a more than four-year low on Thursday ahead of an interest rate decision, as the coronavirus pandemic sparked a flight away from riskier assets.
At 0623 GMT, the rand traded at 17.4300 per dollar, 1.99% weaker than its previous close. The currency is at its lowest level since January 2016.
Africa’s most industrialised economy is already in recession and the coronavirus pandemic, which has killed at least 8,900 people across the world, is expected to make matters worse by hurting tourist arrivals and commodity exports to major trading partner China.
The South African Reserve Bank (SARB) is expected to cut interest rates by 50 basis points on Thursday, more than expected a week ago, following aggressive moves by other major central banks trying to mitigate damage from the pandemic, a Reuters poll forecast.
“Markets across all asset classes are now in full retreat as the effects of COVID-19 weigh on the global economic outlook,” analysts at Nedbank said in a note.
“Today, the markets are eagerly anticipating the SARB (monetary policy committee) meeting, as local liquidity has dried up of late. The current consensus view is for a 50bps cut, although given the current circumstances, there may be opportunity for more.”
The SARB has not cut in increments larger than 25 bps since 2012. – Reuters Africa