Rand nosedives in illiquid trade
The rand fell dramatically morning in illiquid trade as better than expected jobs data from the US along with the intensifying concern about China’s economy led investors to abandon emerging-market stocks. At 8.55am‚ the rand was trading at R16.7229 against the dollar from a previous close of R16.3009. According to Bloomberg data‚ it weakened to as much as R17.91 against the greenback in Asian trade.Against the Euro the rand was R18.2769 from R17.8043 previously‚ and R24.3035 against the pound from R23.6725.The euro was at $1.0929 from a previous close of $1.0922.Barclays Research said the rand was in freefall."The underlying rand mood remains extremely bearish. Local sentiment remains poor and the fact that this weekend’s ANC (African National Congress) conference did not address investor concern‚ suggests that the fear could persist."Additionally‚ if this week’s Federal Reserve speakers heighten US rate hike fear and/or commodity prices are soft‚ then we would expect the rand to come under renewed selling pressure over the coming days‚" said Barclays Research.The rand plummeted by the most in more than seven years on Monday as the market turmoil in China and a drop in US stocks deterred risk-taking.Earlier on Monday the dollar rose as much as 10.3% to R17.9950‚ a fresh record low.The rand’s decline on Monday probably came after "a combination of stops and margin calls caused mass capitulation" by Japanese retail investors‚ Gareth Berry‚ a foreign-exchange strategist at Macquarie Bank in Singapore‚ wrote in a research note.The South African currency‚ which dropped 25% last year‚ has been hurt by a slump in commodity prices‚ lacklustre economic growth and rising US interest rates."The huge spike in risk aversion last week‚ poor liquidity and position liquidation have hit the rand this morning‚" said Robert Rennie‚ global head of currency and commodity strategy at Westpac Banking in Sydney.With little on the data calendar due on the day‚ the rand is likely to take direction from global headlines. With Bloomberg and Reuters - TMG Digital/BDlive..
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