Rand slumps to worst level in months after greylisting, may hit R19/$ soon | Business

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An economist expects that the rand could breach R19/$ in coming days - but it may return to R17.50 in the second half of 2023. | News24_Business

The rand slumped to almost R18.50/$ on Friday afternoon after South Africa was greylisted by a global anti-money laundering body.An economist expects that the rand could breach R19/$ in the coming days - but it may return to R17.50 in the second half of 2023.The rand has been hit hard by the long-expected confirmation that South Africa was greylisted by the Financial Action Task Force , an international body that sets standards to combat money laundering and terrorist financing.

The local currency was trading at R18.46/$ in early afternoon trading on Friday, the weakest level since November last year. It is closed to reaching levels last seen at the height of the pandemic crisis in May 2020.Maarten Ackerman, chief economist and advisory partner at Citadel, says it's possible that the rand could breach R19/$, and even weaker, in coming days.

The currency started the year at R17/$, but has come under pressure in recent weeks as the dollar rushed ahead as new US economic data supported more aggressive interest rate hikes, he adds. The rand started bleeding on Thursday after meeting minutes from the Federal Reserve revealed an increased appetite for hikes.

"SA remains behind the US in the quantum of rate hikes so far, with only a 375 basis points lift in the repo rate versus the 450 basis points lift in the Fed funds rate in the current hiking cycle, resulting in rand weakness as SA’s risk premium with the US has eroded severely," says Annabel Bishop, Investec economist.

 

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_Business RegisterToVoteSA

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