Cape Town — The South African Rand has dropped significantly, suffering a fall on the global market and plunging to a three-year low.
According to Nasdaq.com, on Wednesday morning, the rand traded at 18.6425 against the U.S. currency ZAR=D3, not far from its previous close of 18.6375.
The report said that the “risk-sensitive rand” lost more than 1.6% against the greenback on Tuesday, as caution built ahead of Wednesday’s U.S. Consumer Price Inflation (CPI) print.
It further reported that economists expect the headline CPI to hold steady at an annual 5% and core CPI to moderate slightly to 5.5%.
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Business Tech reported that Kieran Siney, the co-head of financial markets at ETM Analytics the drop could be a direct result of the country’s energy crisis.
“Until there is a concrete plan to resolve South Africa’s energy crisis that the market buys into, the underperformance will persist, notwithstanding the attractive yields on offer and deep undervaluation in the ZAR,” Siney was quoted as saying.
IOL reported that TreasuryONE currency strategist Andre Cilliers also attributed the Rand’s poor performance to the energy crisis.
“As we start the day, possibly the R19.00 level can be on the cards. There is some momentum behind the sell-off, as foreigners sold almost R7 billion worth of bonds yesterday.
“As they say, the trend is your friend, and we would need to see Eskom come out and give a detailed plan on how they plan to stop the electricity crisis,” Cilliers was quoted as saying.
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Compiled by Junaid Benjamin
