Whatshot
Rand plunges to four year low
Rand plunges to four year low
The Rand began trading at around 14.51 to the British Pound on Monday and around 9.611 against the US Dollar. The Rand weakened against both currencies to end the week at 15.30 to the Pound and 10.07 to Dollar. The Rand held its position over the weekend to open at 15.32 to the Pound and 10.07 to the US Dollar.
The Rand became the world's most oversold major currency after the biggest monthly decline since September 2011, according to trading patterns.
The Rand slid 11 percent against the dollar last month, pushing its 14-day relative strength index to 86, above the 70 threshold that signals a currency has fallen too far, too fast. This can be contributed to the concern about union talks regarding wage negotiations in the Mining Industry, which are due to start in June.
Last month's slump in the Rand was also spurred by the sliding prices of Gold and Platinum, metals that count for about 20 percent of South Africa's exports in 2012. Gold dropped 6 percent, following a 7.6 percent slump in April, and Platinum declined 3.2 percent.
President Jacob Zuma talked about the state of the economy last Thursday at a special media briefing in Pretoria.
Zuma said South Africa needed faster growth: "Without faster growth, we cannot succeed in reducing unemployment, poverty, and inequality."
According to Elna Moolman from Macquarie Group, a global provider of financial advisory, the president's speech might have been a trigger for a further fall of the rand.
"It is possible that after the president's speech on Thursday, in which he highlighted some of the big problems in the South African economy, the foreign investors may have been somewhat disappointed by the lack of actionable plans or perhaps just skepticism by now about the likelihood that we will see very strong action to resolve these problems," she said.