Johannesburg - The rand remained volatile in late trade on Wednesday after weakening to a near six-year worst level against the dollar as global markets plummeted amid growing fears of a global recession.
The rand spiked above the R9/$ level to R9.4595 - a level last witnessed in November 2002 - as markets collapsed. Coordinated rate cuts by central banks around the world saw some currencies, including the rand, recoup some of their earlier losses but the rollercoaster ride continued as investors' risk appetite began to wane once again.
A local currency trader said that the rand is being driven solely by the global market turmoil.
"There's a major rise in global risk aversion - a flight from your more riskier assets - which has seen the rand weaken sharply," a local currency trader said.
At 15:50 the rand was bid at R9.3290/$ from a previous close of R8.9184. It was bid at R12.6867/€ from a previous R12.1303 and at R16.2431/£ from R15.6127 before.
The euro was bid at US$1.3610 from US$1.3613 overnight, while gold was quoted at US$918.42 a troy ounce from US$888.92/oz overnight.
Dow Jones Newswires reports that currencies have mostly reversed their immediate reaction to the emergency coordinated rate cuts Wednesday morning, with the safe havens gaining favour again.
Traders are plowing back into the dollar and yen as investors discount the net effect a 50-basis-point reduction in interest rates will have on a global recession at this juncture. The two safe-haven assets have been benefiting over the last two months as investors liquidate out of emerging markets and riskier investments funded in those currencies.
- I-Net Bridge
