South Africa's Flash Crash Exposes Cracks in Currency Liquidity
- Rand briefly tumbled 9% on Monday in turbulent trading
- Such crashes may become more common, Insight, Citigroup say
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It took just 15 minutes on Monday morning for South Africa’s rand to plummet 9 percent in what traders said may be a prelude of the new normal in the global $5.3 trillion-a-day currency market.
Such flash crashes will probably become more common in foreign-exchange trading as liquidity shrinks amid tighter regulation and reduced demand for emerging-market assets, according to Insight Investment Management Ltd. and Citigroup Inc. The rand slid to record lows versus the dollar and yen in Asian trading before recovering the bulk of the day’s losses almost as swiftly.