The rand shot past R14 to the dollar on Friday afternoon, after emerging market currencies crashed and tensions in the global trade war heated up.
By 15h45 on Friday afternoon, the rand toppled almost 3% from its open at R13.74 to sit at R14.12, the weakest point since November 2017.
“The rand and other EM currencies on the back foot as sentiment sours,” Rand Merchant Bank analysts said in a note on Friday, adding that this was due to “geopolitical concerns and the negative impact of the U.S.-China trade spat on global growth.”
Notably, the weakening of the rand is in line with other emerging market currencies dropping, headlined by the Turkish lira, which saw a 12% crash that triggered a global wave of turbulence.
The Turkey crisis comes as a result of a spat between the country and the USA, after the US announced that its reviewing the country’s duty-free access to the US market, which could affect tax on $1.7 billion worth of Turkish exports.
Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, said noted on Friday morning that the rand’s fall was linked to dollar strength, and that the currency would be on the back foot as the dollar continues to squeeze emerging market currencies.