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Cape Town - The rand weakened along with many other currencies after oil slid below $45 a barrel for the first time since OPEC agreed to cut output in November as US shale confounds the producer group’s attempts to prop up prices.
Umkhulu Consulting's Adam Phillips said it will be a "nervous Friday" as the rand slid past R13.50 and was trading at R13.70 to the dollar by 07:45.
Chinese equities headed for their longest losing streak this year amid weakness across most Asian stock markets. The slide in oil saw an intraday jump in the yen, a haven in times of volatility. The Shanghai Composite Index was in line for a fourth weekly decline as regulators try to curb leverage and speculation. The Aussie dollar, the worst-performing G-10 currency this quarter after the Canadian dollar, headed for a weekly loss. Japan and South Korea are closed for a holiday.
"The fact that oil and commodity prices also moved lower affected emerging market currencies across the board, but with the country's position the ZAR was a target," said Phillips.
"While yields have helped the rand and local bonds perform since the credit downgradings, it appears as though offshore players are looking to participate elsewhere even if they do get a good yield here.
READ: Gigaba: Rand volatility not due to Zuma's reshuffle
"It certainly felt that way from 16:00 on Thursday because suddenly there was no volume as it moved through 13.60.
"The oil price is a concern because yesterday OPEC ruled out any supply cuts and a weaker oil price generally affects all emerging market countries. It looks like we are in for a nervous Friday and the volatility that I expected in May has happened rather quicker than I expected.
"We might see more woos for the rand, but it might be a good time for exporters to protect the downside by looking at zero cost collars. The last time we saw EURZAR above 15.00 was in early December. This is the same for the GBPZAR. In both cases I am not advocating doing too much, but with politics affecting both currencies it is worth locking in at these levels."
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