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The rand fell to its lowest level ever against the dollar in overnight trade, as global markets reacted to the downgrade of SA's last remaining investment grade credit rating to junk by Moody's.
"The rand has been the worst performing emerging market currency over the past week and traded at its weakest level ever at R18.05 in Asia early this morning," said TreasuryONE in a note to clients on Monday morning. "The local currency is 17% weaker over the past month'.
Moody's on Friday night lowered SA's sovereign credit rating to the first rung of noninvestment grade, citing a deterioration in the country's fiscal strength, "structurally very weak growth", and little progress on structural reforms of the economy.
By 07:50 on Monday the rand had recovered some of its losses to trade at R17.90 to the greenback. According to Bianca Botes of Peregrine Treasury Solutions, this was due, in part, to China’s central bank unexpectedly cutting interest rates by 20 basis points, which "assist[ed[ the rand in recovering some of its earlier losses".
The local currency's previous weakest intraday level was R17.91/$ back in 2016, which was caused by a sharp fall in the Chinese market, as Fin24 previously reported.
