Rand takes a dive as world markets sink
Markets around the world sank as profit taking and risk aversion made a return.
The JSE All Share Index closed 3,54 percent in the red, while the blue chip Top 40 index was down 3,80 percent.
The rand weakened as much as 2 percent against a stronger dollar, taking its cue from a weaker euro and global stock markets. It was trading at R9,74 to the dollar when the JSE closed yesterday, from a close of R9,57 on Friday.
T-Sec economist Mike Schussler said the rand had weakened because the dollar picked up.
"The global financial risk has returned. The stronger US dollar is bringing down commodity prices. South Africa gets severely affected because it trades mainly on commodities," he said.
Miners lost a lot of ground yesterday, with the mining index closing 5,25 percent down. Local banks were down 3,57 percent, financials shed 2,25 percent and industrials were off 2,39 percent.
Most of the woes bringing down the markets came from the US auto sector, which weighed heavily on local platinum producers.
US stocks fell sharply on open as US President Barack Obama said neither General Motors nor Chrysler had proposed sweeping enough changes to justify further large federal bailouts, and demanded "painful concessions" from creditors, unions and others as their price for survival.
The Obama administration yesterday forced out GM's chief executive, pushed Chrysler towards a merger with Fiat of Italy and threatened bankruptcy for both.