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Rand weaker on rising coronavirus fears

At 1600 GMT, the rand was 2.1% weaker at 18.5280 per dollar, rolling back from a 2-week best of 18.0200.

Picture: EWN.

JOHANNESBURG - South Africa’s rand weakened on Thursday as a global asset price rally evaporated, with investors bracing for more bad news after dismal economic releases around the world signalled coming pain for developed and emerging economies.

At 1600 GMT, the rand was 2.1% weaker at 18.5280 per dollar, rolling back from a 2-week best of 18.0200.

Fresh signs of the economic havoc caused by the novel coronavirus saw riskier and commodity-influenced currencies back on the ropes as investors opted for safe havens.

Locally, the Treasury forecast a deep recession and sharply falling tax revenues.

Shell cut its dividend for the first time since World War Two in the face of a massive drop in oil demand, triggering a dive in its share price and those of British banks as well as commodity linked assets around the world.

A soaring jobless rate in European powerhouse Germany was compounded by the European Central Bank disappointed some investors by declining to expand bond purchases to junk bonds, further roiling risk sentiment.

Alongside the rand, Brazil’s real and Mexico’s peso fell about 1.6% and 0.8% respectively.

S&P’s decision late Wednesday to push South Africa’s credit rating further into non-investment territory, saying COVID-19-related pressures would have significant adverse implications for its already ailing economy, kick-started the rand’s slide, with selling accelerating in the offshore session.

Bonds bucked the trend, with yields continuing to dive. The 2030 government issue traded at 10.27%, down 25 basis points.

The Johannesburg Stock Exchange (JSE) slipped as a raft of weaker macro-economic numbers reversed the bullish trend of the past few days.

The FTSE/JSE Top 40 Index closed down 1.03% at 46,348 points and the all share index ended down 1.02% to 50,336 points.

The mining index was down 2.06% while the banking index was up 0.89%.