GLOBAL anxiety following North Korea’s test of a nuclear weapon earlier on Tuesday weakened the rand, with the local currency coming within a hair’s breadth of R9/$.
Mark Kalkwarf, a senior portfolio manager for the Iquad group, attributed the slide in the domestic currency on Tuesday to increased risk aversion, and a flight to safe- haven currencies following North Korea’s nuclear test in defiance of a United Nations resolution.
"This, in combination with a large outflow from private equity clients, pushed the rand weaker today," he said.
At 3.30pm, the rand was bid at R8.9758 to the dollar from Monday’s close of R8.9074 and Friday’s close of R8.8693. The local currency was bid at R12.0625 to the euro from its previous close of R11.9319 and at R13.9946 against sterling from R13.9348 before. The euro was bid at $1.3447 from Monday’s close of $1.3401 and Friday’s close of $1.3365.
Internationally, talk of currency wars continues to dominate the discourse as many countries pursue increasingly loose monetary policy.
"There is plenty of rhetoric reaffirming commitment to market-driven exchange rates, with no indication of imminent action on currencies from the G7," Mr Kalkwarf said.