EXPERT VIEW FROM MAREX SPECTRON: South African strikes cause rand to drop 9%

The second wave of strikes in South Africa, coupled with a worsening economic picture, are hitting the rand.

The rand has weakened 9% against the dollar so far in October, pausing on Monday October 8 at the critical 9.00 level in profit taking.

A weaker rand makes it hard for the authorities to cut rates, but current yields are not high enough to prevent further currency weakness.

The balance of risks, should the domestic situation remain fraught, is for further rand weakness. The exchange rate will need to drop back under 8.60 for the pressure to abate.

Chris Eagle is the global head of FX at Marex Spectron.

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