The rand has witnessed lots of rising and failings but this time, it got down real bad as Britain gave a large vote to leave the European Union (EU).
Like the British pound which plunged to as low as 8.7pc, before recovering slightly to a loss of 4.9pc, after the UK voted to leave, the SA rand got its hardest hit down to 7.8% from midnight to Friday according to Adam Phillips of Umkhulu Consulting.
This sudden fall is described as the worst so far. Worse than what was experienced when President Zuma fired former finance minister Nhlanhla Nene.
Britain’s decision to leave the EU caused a huge economic breakdown for the country starting with a huge fall of its currency in 30 years resulting to another fall of the rand from R14.33 to R15.45.
“I am not sure what to write because even up to when I went to bed at midnight it looked like the remain were going to win,” he said. “Five hours later and unofficially the British public has decided to leave the EU by 52% to 48%.”
By 08:30, the rand was 6.77% down at R15.57 to the dollar but was up 1.52% against the pound at R21.23 and Phillips said this would be a big disaster for emerging market currencies.
“This is not going to be good for farming exports. The Japanese equity market is down over 7%,” he said.
“The SA Reserve Bank will be monitoring very closely, although there is not much they can do,”
Remember that the UK now has two years to finalize everything with the EU, so I am sure there are going to be plenty of meetings and new decisions from it,” he said. “As it stands this is a disaster for all emerging market currencies.”
This echoed the stern warnings of economists that a vote for Britain to leave would cause another route across global markets that would wipe trillions off valuations, just months after a painful China-fuel sell-off.
As the pound collapsed, equity and oil markets fell freely. Sterling also crashed more than nine percent to $1.3305, its weakest level since 1985, while the greenback itself slumped below 100 yen for the first time in two-and-a-half years as traders fled to safety.