Bloomberg reports the Rand slumped the most in emerging markets, losing as much as 8 percent against dollar before trading 7.2 percent weaker at 15.5409 by early morning in Johannesburg. The rand also plunged 11.5 percent to 6.5487 yen and fell 4.5 percent to 17.1493 per euro.
Globally carnage came to markets as results of the referendum showed Britain had voted to leave the European Union. Sterling took a record plunge . It means it could prevent the Federal Reserve from raising interest rates as planned later this year.
The British pound also collapsed no less than 18 US cents, the biggest fall in living memory. It’s the worst rate to the dollar since 1985. The euro also slid 3.1 percent to $1.1022.
The Rand Daily Mail reports economists agree that the effect of a the Brexit vote on emerging markets such as SA may not last too long. The paper quotes Capital Economics economists Neil Shearing and Liza Ermolenko who said a shock to global capital flows would be short-lived. “Even if the UK economy contracted by 5% and UK imports fell by 10%‚ the expected drop in emerging-market exports to the UK would be equivalent to just 0.1% of aggregate emerging market’s GDP‚ the economists at Capital Economist estimate.”
