South Africa

South Africa Exchange Rate April 2020

South Africa: Rand slumps to new all-time low on rising fiscal concerns and surprise Central Bank cut

The South African rand (ZAR) sank to a new record low against the U.S. dollar in April amid faltering government action to curtail the rapid deterioration of the public accounts. The currency ended 24 April at ZAR 18.98 per USD, marking a 6.9% depreciation over the same day in March. Furthermore, the currency was down 24.1% year-on-year and 26.3% year-to-date.

On top of the emerging market sell-off prompted by Covid-19, Moody’s downgrade of South Africa’s last investment-grade rating on 27 March exacerbated concerns over the sustainability of government debt, prompting investors to ditch the rand. Moreover, the currency plunged further for much of April, following Fitch Ratings’ decision to downgrade the country’s rating further down the junk scale on 3 April and the Central Bank’s unexpected decision to cut the repo rate on 14 April.

Looking ahead, the rand is currently expected to recover some of its losses, although the blow to economic activity from the pandemic and low interest rates will keep the currency under pressure.

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