Rand continues to plummet, major losses on JSE
The currency has lost around R2 against the British pound in just two days.
JOHANNESBURG - For a second day, the rand has continued to plummet with major losses on the Johannesburg Stock Exchange (JSE).
The local currency has been under pressure for the past few months, but after an announcement on Wednesday that the finance minister had been fired, the currency went into a tailspin.
The currency has lost around R2 against the pound in just two days.
It's now around record lows of R24.27 to the pound, R15.93 to the dollar and R17.55 to the euro.
The JSE has also come under major pressure today with the all share down around 1.5 percent.
Economists are in agreement that direct leadership is needed to stop the rand from losing more value.
"I hope sometime, maybe next week, we will hear the new minister speak and I hope he reassures the market."
Nedbank economist Isaac Mathego said, "The minister is going to have to ensure that very quickly he ensures the markets that he will remain committed to foreign investors and keeping government expenditure growth under control."
Chris Hart from Standard Bank Wealth and Investments says the markets are not recovering.
"These markets are extending the weakness; they are actually showing signs of exhaustion and weakness."
There is general consensus that the Reserve Bank urgently needs to intervene.
Yesterday, banking shares dropped by more than 10 percent to levels last seen after the 2008 global financial crash.
Sasfin market analyst David Shapiro said the effect of the president's announcement on the economy had been similar to the effect the Lehman Brothers' bank shut down.
"Don't underestimate what this means. Don't underestimate the hardships that a rand at 15,30 or 15,40 is going to bring to us. It's going to tipple the economy into a recession."
Hart said there had to be strict policy against excessive spending.
He said the banking sector was hit hard due to the bond yields.
"The financial services sector was hit very hard because they have to hold these government bonds in their balance sheet as part of regulation."
Zuma has not indicated if he intends on explaining his decision, despite calls for him to do so from within the Tripartite Alliance and the investment community.