Picture: GALLO IMAGES/FOTO24/LOANNA HOFFMAN
Picture: GALLO IMAGES/FOTO24/LOANNA HOFFMAN

THE rand was weaker late on Monday, but off its intraday record weakest level of R17.91 to the greenback in early Asian trade, as uncertainty about weaker Chinese markets and growth concerns continued to weigh on global market sentiment.

At 3.21pm, the rand was trading at R16.5431 against the dollar from a previous close of R16.3009.

Against the euro the rand was R18.0120 from R17.8043 previously, and R24.1308 against the pound from R23.6725.

The euro was at $1.0889 from a previous close of $1.0922.

"The rand has hit new historic lows as risk aversion spiked globally on falls in China’s stock market and a wobble in the US, with foreign portfolio disinvestment from emerging markets," Investec chief economist Annabel Bishop said.

She said illiquidity had also had an effect on the domestic currency. Japanese markets were closed due to a public holiday, causing more illiquid trade on the day.

With Asian markets open earlier than South African markets, the domestic currency is reported to have neared R18 to the dollar before SA markets opened today, with Asian rand liquidation positions also reported, Ms Bishop said.

"The culmination of negative news, particularly the liquidation of the previous carry trade into SA from the Japanese yen, (saw) the rand record R16.77 to the dollar once SA markets opened today and R24.35 to the pound, mainly on the move into safe haven investments," Ms Bishop said.

Global market rumours of further SA and Brazil credit rating downgrades also negatively influenced the rand, she said.

"Global risk aversion has always influenced the rand substantially as it is a highly liquid, heavily traded currency, with up to a $25bn daily turnover recorded. The carry trade operates heavily in the rand market and so sentiment is a key determinant for the local currency," Ms Bishop said.

Dow Jones Newswires reported that the rand had lost 16% of its value this year as market turmoil in China sent investors fleeing from currencies and bonds from countries that trade heavily with the world's second-biggest economy.

The newswire said the rand had lost 30% of its value in the six months since the Chinese market turmoil began.