The rand breached R17.00 against the dollar on Wednesday (19 March), and has pushed through R17.50 in morning trade on Thursday as the coronavirus-driven sell-off of riskier assets continues aggressively, leaving carnage in its wake across all asset classes with investors scrambling to get their hands on cash.<\/p>\n
“The rand lost even more ground in the overnight session, with little attention to technical levels,” said Bianca Botes, treasury partner at Peregrine Treasury Solutions, in a morning note.<\/p>\n
The FTSE\/JSE Africa All-Share Index slumped 7.2% to its lowest level since June 2013 on Wednesday, to 38,600 points.<\/p>\n
Bloomberg reported that the dollar continues to make gains against every major developed and emerging market currencies in Asia trading.<\/p>\n
“No asset class is safe right now from being sold to get your hands on dollars,\u201d said Oriano Lizza, a sales trader at CMC Markets PLC<\/span> in Singapore. \u201cNormal market mechanics have disintegrated – I don\u2019t see any stop to this for some time yet with liquidity crunch worries in markets. It\u2019s a case of sell everything you can to get the mighty dollar, it\u2019s the ultimate haven.”<\/p>\n Even gold appeared to be losing a battle against the greenback as it soared to a record on mounting concern there\u2019ll be a global recession because of the pandemic, with investors preferring the haven offered by the world\u2019s reserve currency against shelter in the precious metal.<\/p>\n Gold dropped as much as 1.4% to $1,465.34 an ounce.<\/p>\n “Be careful when looking for a bottom, as the market bloodshed caused by the pandemic does not seem to be over just yet,” said Botes.<\/p>\n The South African Reserve Bank\u2019s (SARB) Monetary Policy Committee (MPC) will meet on Thursday over interest rates.<\/p>\n “We expect the SARB to cut rates by 50bps today in an effort to assist the economy in the wake of the Covid-19 outbreak. Other data due includes initial jobless claims from the US,” said Botes.<\/p>\n Of 21 economists in a Bloomberg survey, 11 predict a 50 basis-point reduction, while the balance expect the rate to be lowered by 25 basis points.<\/p>\n Forward-rate agreements show traders have switched from pricing in a less than 50% chance of a 25 basis-point cut three weeks ago to betting on a 100% chance that the central bank will cut by 50 basis points.<\/p>\n With an economy that slumped into a recession even before the coronavirus intensified, South Africa\u2019s inflation-targeting central bank is facing calls to ease policy to support economic growth.<\/p>\n The Reserve Bank has repeatedly said that monetary policy alone cannot help South Africa\u2019s economy and has a track record of being cautious when moving down – the last time it cut at consecutive meetings was in 2010, Bloomberg reported.<\/p>\n The rand lost further ground against the major currencies in morning trade on Thursday:<\/p>\n