The rand was weaker on Monday morning (12 August) as political uncertainty and a bleak economic outlook continued to weigh on the local currency.

The currency hit its lowest level since September 2018 last week, with weak data, worries about the impact on the economy of heavily indebted state-owned energy firm Eskom and negative commentary from credit rating agencies piling pressure on the currency, Reuters reports.

“The long-term objective is still the 2016 highs of R17.90 but the more immediate target will be the 2018 highs of R15.69, which could materialise this week,” Standard Bank’s chief trader Warrick Butler said in a note.

“Volatility has of course picked up massively over the last three weeks and the rand is now officially the worst performing currency globally since this mess started in the middle of July.”

The rand is now testing the R15.30 mark, with all eyes still squarely on investor sentiment hinging on trade dynamics and global growth, says Bianca Botes, treasury partner at Peregrine Treasury Solutions.

“Donald Trump’s comment on Friday that trade talks with China due to start on 1 September might be cancelled, after also having announced additional tariffs on China, is adding pressure to the fragility of investor sentiment,” she said.

“Trump also made it clear that the US is in no way ready or willing to make a deal at this stage but that if talks continue it will be on an open basis.”

The rand started Monday trading at R15.25/$, R17.09/€ and R18.36/£. The general consensus is that the rand is oversold at these levels and that a retracement is on the cards, said Botes.

“The only question, however, is whether the global geopolitical environment will allow for this correction.”

The rand was trading at the following levels against the major currencies at 09h55 on Monday:

ZAR / USD: R15.32 (-0.42%)

ZAR / GBP: R18.48 (-0.73%)

ZAR / EUR: R17.11 (-0.13%)

Read: Rand set for longest streak of losses in 2 years