Picture: PUXLEY MAKGATHO
Picture: PUXLEY MAKGATHO

THE rand had tumbled to a record low against the dollar by midday on Thursday, after the weakening of the Chinese yuan sent shockwaves through global forex markets.

China’s authorities allowed its currency to drop to its lowest level since August last year, leading to charges that they were engaging in a trade war with other Asian currencies by devaluing the yuan to prop up its economy.

Early on Thursday, Beijing authorities halted trade in the stock market for the second time this week, as the Shanghai Composite index plunged in the first 30 minutes of trade. The index fell more than 7%.

At 11.30am the rand was at R16.1341 against the dollar from R15.8614 previously. It fell to R16.2030/$ in late morning trade.

Against the euro the rand was at R17.5303 from R17.1016 and R23.5588 against the pound from R23.2071.

The euro was at $1.0865 from a previous close of $1.0781.

Analysts said the rand was reacting more to Chinese currency weakness than dollar strength at present.

"The negative issues surrounding the Chinese economy still filters through most emerging markets," Nedbank CIB said.

The dollar was actually weaker against the euro in the morning session after US factory orders and inventories fell short of expectations. The Japanese yen continues to strengthen, again due to safe-haven demand.