Rand slides after WHO declares Covid-19 coronavirus a pandemic

The rand came under renewed pressure on Wednesday (11 March), after the World Health Organisation (WHO) moved to declare the Covid-19 outbreak as a pandemic following a 31% surge in the death toll in Italy.

Equity markets tanked after the announcement, and futures trended down almost 5%, said Bianca Botes, treasury partner at Peregrine Treasury Solutions.

US president, Donald Trump also suspended all travel from Europe (excluding the UK) for 30 days.

“Local gold, mining and manufacturing production are due for release today, while the EU will release industrial production, followed by the ECB interest rate decision. The US is set to release PPI and jobless claims this afternoon.

“The rand is on the back foot, with the next target set on R16.50/dollar,” Botes said.

At 07h15 on Thursday (12 March), the rand was traded at the following levels against the major currencies:

  • ZAR/USD: R16.39 (+1.24 %)
  • ZAR/GBP: R21.01 (+1.21 %)
  • ZAR/EUR: R18.52 (+1.48 %)

Stock markets

The global stock rout extended on Thursday, while the yen climbed and bond yields tumbled after president Trump’s travel ban announcement, Bloomberg reported.

Oil prices tumbled again, with Brent crude off around 6% to approximately a $34 a barrel.

Global equities are now on course for the second-worst week since the global financial crisis in 2008, only eclipsed by the rout in the last week of February.

Moves did ease somewhat as the Asian trading day wore on, however European equity futures tumbled more than 8%, while the Dow Jones Industrial and Nasdaq contracts slumped by the daily limit after Trump unveiled steps including lending aid for small businesses and asked Congress to pass undefined payroll-tax relief.

“Recession risk is rising and we are nowhere near pricing that in,” said Sue Trinh, global macro strategist at Manulife Investment Management in Hong Kong.

“All the ‘solutions’ we are seeing from the powers that be are reminiscent of the great financial crisis, but what’s more important is resources for the virus fight,” she said.

Pandemic

The WHO has been assessing this outbreak around the clock and are deeply concerned both by the alarming levels of spread and severity, and by the alarming levels of inaction, said director-general Tedros Adhanom Ghebreyesus in a media briefing on Wednesday.

We have therefore made the assessment that Covid-19 can be characterized as a pandemic, he said.

“Pandemic is not a word to use lightly or carelessly. It is a word that, if misused, can cause unreasonable fear, or unjustified acceptance that the fight is over, leading to unnecessary suffering and death.

On Wednesday, South Africa’s health minister, Dr Zweli Mkhize confirmed that six more cases of coronavirus have been detected in the country, taking the total number of infected up to 13.

The patients are from Gauteng, KwaZulu-Natal and the Western Cape, where they travelled from Europe.


Read: Banking group predicts full recession for South Africa in 2020 – because of load shedding and the coronavirus

Must Read

Partner Content

Show comments

Trending Now

Follow Us

Rand slides after WHO declares Covid-19 coronavirus a pandemic