Rand Ousts Lira as Wild Child of Emerging-Market Currencies
Falling Rand Set to Oust Lira as Most Volatile in Emerging Pack
(Bloomberg) -- The South African rand is reasserting itself as the wild child of emerging markets.
The currency’s price swings have been the widest among 24 of its peers in the past week as risk assets have been rocked by everything from concern over the U.S.-China trade dispute to Britain’s Brexit confusion. In that time, the rand has shed 3.5 percent against the dollar.
The rand is also climbing back up the implied volatility ladder.
After being overtaken by Turkey’s lira in May, the rand’s one-week implied volatility against the dollar is now a hair’s breadth away from regaining the top spot. Its expected price swings briefly surpassed the lira’s on Nov. 28 before dropping back again.
READ MORE: More of the Same or ‘Messy’ for Rand in 2019, Nedbank Warns
The rand climbed to a three-year high against the dollar in February before giving up its gains to slump 13 percent this year as domestic political turmoil, liquidity and debt problems at state-owned companies, and stagnant economic growth added to global headwinds. After falling 1.6 percent on Monday, it gained 0.5 percent today to 14.3167 per dollar by 3:15 p.m. in Johannesburg as reports showed mining and manufacturing output beat estimates in October.
Price swings will probably widen as trading volumes dry up toward year-end, according to Michelle Wohlberg, a fixed-income trader at FirsRand Bank Ltd. in Johannesburg.
“December liquidity is officially here and with it comes the joys of a volatile market,” she said in a note to clients.
To contact the reporter on this story: Colleen Goko in Johannesburg at cgoko2@bloomberg.net
To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Justin Carrigan, Hilton Shone
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