The rand took another hit against the US dollar on Monday night, with analysts warning that worse is still to come.<\/p>\n
The currency dipped as low as R17.91 to the dollar as Asian markets continued abandoning the rand, before pulling back to a level around R16.65 at the close of the local market.<\/p>\n
This is the second time the rand has spiked in this manner, having hit R17.99 to the dollar as Asian markets opened late Sunday night local time.<\/p>\n
In early trade on Tuesday (12 January) the rand settled once again to a new record low of R16.86.<\/p>\n
The rand’s weakness, while currently being beaten around by the Japanese and Chinese markets, has been exacerbated by president Jacob Zuma’s controversial decisions and comments over the past month.<\/p>\n
Zuma infamously sacked Nene in December 2015, replacing him with unknown ANC back-seater, David van Rooyen. This led to a collapse in the market, pushing the rand to record lows against the dollar.<\/p>\n
Following emergency meetings with senior ANC leadership and the South African banking sector, Zuma back-tracked and replaced Van Rooyen with former finance minister Pravin Gordhan three days later.<\/p>\n
Zuma called the market reaction \u2013 and the reaction from politicians, business leaders and South African citizen \u2013 an \u201coverreaction\u201d.<\/p>\n
According to analysts from various banking groups, the rand is in for a tough time as there is no sustainable recovery expected\u00a0for a long time.<\/p>\n
Analysts from Standard Bank said that the rand is likely to hit the R17.50 level, while any recoveries will be short-lived as investors shun developing nations.<\/p>\n
Economist Mike Schussler from Economists.co.za sketched a grim scenario for the South African economy should the rand lose 20% from its value against the greenback in 2016.<\/p>\n
Last year the rand gave up 25.9% of its value.<\/p>\n
\u201cIf the rand should fall just another 20% over the next year, by the beginning of 2017 a dollar would cost R20. That R20\/$ is on the cards so quickly is frightening for the country,\u201d he said.<\/p>\n
Wichard Cilliers, director and chief dealer at treasury services company TreasuryOne, said that the current economic climate will likely lead to a hike in interest rates.<\/p>\n
R20 to the US dollar is on the cards<\/a><\/strong><\/p>\n Rand touches R16 vs dollar<\/a><\/strong><\/p>\n Weak rand not Zuma\u2019s fault \u2013 ANCYL<\/a><\/strong><\/p>\n