RAND gets pounded

Madoda Milazi and Reuters

Madoda Milazi and Reuters

The rand took a pounding yesterday, sliding to R11,18 to the US Dollar and R14,36 to the Euro in late trade as the stronger dollar put pressure on commodities and forced investors to flee riskier assets in favour of the greenback.

Christopher Gilmour, analyst at Absa Investments, said South Africa was getting a double whammy because, not only was it regarded as being an emerging economy, but the rand was also a commodity currency.

"As the outlook for commodities deteriorates, so commodity currencies take a hit," Gilmour said.

Another commodity currency, the Australian dollar, fell 3,2 percent against the US dollar.

The JSE All Share Index was down 4,60 percent when the local bourse closed, while Resources 20 ended 5,92 percent at 36235,68. Industrial 25 lost 3,72 percent closing at 16253,65, with Financial 15 ending at 5563,45, down 5,16 percent.

Gold Mining closed at 1717,48, down 5,82 percent and Platinum Mining ending 5,51 percent down at 47,11.

Makwe Masilela of Nehawu securities, said Bank of England governor Mervyn King, didn't help the situation on Tuesday when he said the UK economy was probably entering its first recession in 16 years.