Rand hits new low in the midst of dollar strength, unfortunate standpoint

On Tuesday, the rand fell to a record low as a result of a stronger dollar and deteriorating investor sentiment in the country, which has resulted in significant capital outflows.

The rand was about 0.09 percent lower against the dollar at 15.18 GMT, compared to its previous close. It hit a new low in early exchange on Tuesday, contacting 19.860 to the dollar.

Since the beginning of the month, the currency has lost more than 7% against the dollar, and it has lost more than 15% since the beginning of the year.

The most industrialized economy in Africa is facing its worst rolling blackouts, which are making persistently high inflation even worse and forcing the central bank to keep raising interest rates.

On Tuesday, the dollar saw a slight decline against a basket of global currencies, falling 0.144% to 104.1. However, the index is still close to its two-and-a-half-month high.

According to DailyFX analyst Warren Venketas, the dollar-rand exchange rate “is very much at the mercy of the US at present and will continue to do so until we get more clarity.”

According to Greg Davies, head of wealth at Cratos Capital, an asset manager, the power crisis makes South Africa less appealing to international investors.

On the JSE, shares fell, with the blue-chip Top-40 index ending the day 0.73 percent lower and the broader all-share index ending the day 0.88 percent lower.

The country’s largest food manufacturer, Tiger Brands, has expressed concern that it may not be able to meet its annual profits as a result of the power outages, which are also having a negative impact on the earnings of some of the most prominent businesses.

Casparus Treurnicht, an analyst and portfolio manager at Gryphon Asset Management, stated, “We’ve had poor results coming from Tiger Brands and Pepkor, two companies closely followed by foreigners.”

Pepkor, a major retailer, lost more than a tenth of its market value, and Tiger Brands’ shares fell by more than 16%.

The benchmark 2030 government bond from South Africa was weaker, with the yield climbing 19.5 basis points to 11.315%, the highest it has been since the Covid-19 global market collapse in early April 2020.