Rand plunges in early trade in emerging market rout

Update: The rand was trading at R14.48/$ at 10:28, down 2.7% on the day. 

The rand plunged in early trade on Monday to briefly trade under R15/$, before strengthening, as it continued to be dragged lower by the Turkish lira and Russian rouble. 

The local currency opened at R14.13/$ and immediately plunged to under R15/$ for the first time since mid-2016.  It was changing hands at R14.65 to the greenback at 07:46. By 08:32 it had strengthened to trade at R14.37/$.

Bianca Botes of Peregrine Treasury Solutions said in a morning note that there was little local policymakers can do to assist at the moment.

"The rand is being subjected to global sentiment – or rather lack thereof – in the emerging market space [...] The sell-off in emerging market assets will continue to be broad based for now and all one can do is ride it out." 

• READ: Turkish Lira implosion spells trouble for emerging markets

"There is some rand support to be found at R15.00, which has become the next big psychological level, while a range of R14.50/R15.00/$ can be expected." 

Jameel Ahmad, the global head of currency strategy and market research at FXTM, said the rand would likely continue to take its cue this week from the movements of its fellow emerging market currency the lira. 

"The threat for the South African rand will be that investors continue to remain "risk off" during this period, with a strict reduction in trader appetite towards emerging market assets. This means that higher-yielding assets, like the South African Rand will be off the table for traders and we can expect for the rand to mirror the volatility being seen in the lira."

"If the Lira takes another aggressive dive, the rand will be at high risk to be taken down with it," he said. 

* This article was updated at 08:30 and 10:30 with the latest exchange rates. It was updated at 11:25 to indicate the rand breifly dipped below R15/$ and add comment by Jameel Ahmad.