Rand crumbles as Trump victory looks more likely
The US presidential election has put an abrupt end to the gains made by the rand in the past few weeks, as a surprisingly likely victory by republican candidate, Donald Trump, sends global markets into a panic.
Overnight, the rand lost massive ground, weakening over 4.6% from an overnight low of R13.18 to levels as high as R13.79 in the morning. It us currently trading at R13.72 to the dollar.
By 7.30am South African time (12.30am in New York), vote counting in the US elections showed an incredibly close race, with Trump leading democratic candidate Hillary Clinton by 29 electoral votes.
Trump was at 244 electoral votes, while Clinton was at 215 – either candidate would need 270 votes to win the majority vote.
The results were unexpected, with many polls leading up to the election predicting a Clinton win by some margin. The plot twist – reflecting a similar twist in Brexit vote earlier in the year – caused a major upset to investors, who are panicking, and moving into safe haven assets.
As a result, many markets across the world, including South Africa, are taking some pain, as investors fear a Trump victory could cause global economic and trade turmoil.
Currencies, such as the Mexican peso went into free-fall, as the implications of a Trump victory hit home.
Markets have tended to favor Clinton as a status quo candidate who would be considered a safe pair of hands at home on the world stage. A Trump victory would trigger massive uncertainty that would likely undermine risk assets at least initially, economists have said.
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