Cape Town – South Africa’s rand reportedly started the week on a low note, as it weakened, with the dollar strengthening amid global growth fears.
According to IOL, the rand was battered last week and hit multiple lows as investors sought the safety of the US dollar at a time of high economic uncertainty and growing fears of a global recession.
On Monday, the rand was within a touching distance of hitting R17 to the US Dollar after trading at R16.99, a level unseen since September 2020.
The depreciation, according to BusinessTech, is mostly driven by the stronger dollar/weaker euro dynamic not necessarily by local factors.
However, persistent load shedding, reports of insecurity and potential social instability, and expectations that higher local inflation will push rates higher, all play a role, said the report.
“The rand weakened by another 2.3% week-on-week against the greenback, while it lost a similar magnitude against the UK pound – which found some, likely temporary, support in the wake of the resignation of prime minister Boris Johnson,” Economists at the Bureau of Economic Research (BER) said as quoted by the report.