The rand plummeted by the most in more than seven years on Monday as the market turmoil in China and a drop in US stocks deterred risk-taking.
The rand was 2.39 % weaker at 16.71 against the U.S. dollar earlier this morning, stabilising after falling as much as 10.3 percent at one stage in Asian trade to reach 17.9950 per dollar, by far its weakest level ever.
The rand’s decline on Monday probably came after “a combination of stops and margin calls caused mass capitulation” by Japanese retail investors, Gareth Berry, a foreign-exchange strategist at Macquarie Bank in Singapore, wrote in a research note.
The South African currency, which dropped 25% last year, has been hurt by a slump in commodity prices, lacklustre economic growth and rising US interest rates.
Losses in the rand accelerated in December after President Jacob Zuma unexpectedly fired his finance minister only to alter the decision days later, while the tumultuous start to the year in China has further damaged sentiment.