The rand weakened past 17 per dollar on Monday as the South African currency’s resilience is tested by fears of a US recession even as local fundamentals remain supportive. Moneyweb rand cuurrency
The rand weakened past 17 per dollar on Monday as the South African currency’s resilience is tested by fears of a US recession even as local fundamentals remain supportive. Read: Rand hits R17 to the US dollar Skipping the broad Covid-related slump in global markets in 2020, the US recessions of 2008/9 and 2001 knocked as much as 13% off the rand’s value. Based on Bloomberg scenario-planning tools, similar conditions this time round could see the rand weaken by about 12%.
While a global recession could weigh on oil prices, which would benefit energy importers like South Africa from a balance-of-payments point of view, that’s only half the story, according to Nedbank Group Ltd. Lower oil prices help curb inflation, they’re also a drain on dollar liquidity globally, boosting the greenback and weighing on emerging-market currencies as financial conditions tighten and funding costs rise, according to Nedbank.
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