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The rand was trading at R17.45/$ early on Thursday morning as emerging market currencies came under fire.
It has now weakened 10% so far this month against the dollar, and crashed through the previous record closing level of R16.8717/$ on 18 January 2016. But it is still some way from its weakest every intraday trading level - R17.9169/$.
Coronavirus fears triggered extreme market volatility and investors embraced the perceived safety of the American dollar.
“A growing sense of unease over how badly the pandemic will hit the global economy is fuelling explosive levels of risk aversion, hitting appetite for riskier assets including emergency-market currencies,” says Lukman Otunuga, senior research analyst at FXTM.
The pound hit its lowest level against the dollar in 35 years, while the Aussie dollar fell to its lowest level in 17 years.
Brent crude oil fell to its weakest level in 17 years overnight, reaching $27 a barrel. This has added pressure on countries which depend on oil income. The Russian ruble has lost 15% of its value against the dollar so far this month. The currencies of Brazil, Mexico and Colombia are all at record lows.
There was also some concern about the rand ahead of a key interest rate decision on Thursday.
Investors are nervous that South Africa’s monetary policy committee will announce a large interest rate cut on Thursday. A lower interest rate makes the rand less appealing to foreign investors.
“With the local currency entangled in a losing battle with external and domestic risks, further weakness could be expected ahead of Moody’s credit rating decision at the end of the month,” added Otunuga.
The rand was flat against the pound (R20.07), but 2% weaker against the euro (R19.01).
