The Rand Is Paying the Price For South Africa’s Economic, Political Woes
- Currency hits record low versus dollar with more weakness seen
- Economy in focus after central bank’s latest rate hike
Rand banknotes at a street vendor's stall in the Sandton district of Johannesburg.
Photographer: Leon Sadiki/Bloomberg
The rand is paying the price for South Africa’s woes, with the 20 per dollar level now firmly in sight as investors fret about restrictive monetary policy adding to a deepening power crisis and political missteps to throttle the already ailing economy.
The currency plunged to a record 19.8468 per dollar on Thursday after the South African Reserve Bank raised its policy rate to a two-decade high. That capped six straight weeks of losses for the rand in the face of unprecedented electricity shortages and a diplomatic row with the US over South Africa’s ties with Russia. Options pricing shows an 80% chance that it will hit 20 within the next month.