The rand weakened to about R16.58 per dollar by Friday afternoon, its softest level in a week. The currency had closed at R16.37 on Wednesday.
According to Reuters, the moves in currency and stock markets came from new doubts about the money big tech firms are spending on artificial intelligence. These doubts sent investors to the safety of government bonds.
“The risk aversion in markets, along with falling precious metal prices and elevated energy costs are keeping the rand on the back foot for now,” said Andre Cilliers, currency strategist at TreasuryOne.
Cilliers said the rand would likely settle around current levels ahead of central bank interest rate decisions next week.
Rupert Hare, head of multi-asset at Prescient Investment Management, said the rand has lost around 3% since the start of September. Over the same period, the dollar gained around 2% against a wider basket of currencies.
“So, in short, the main driver of rand weakness has been dollar strength,” Hare said. He said markets now expect US interest rates to stay higher for longer, which makes the dollar more attractive.
Hare did not agree that fear in global markets explains the moves. “Global risk aversion is a headline narrative rather than a market reality,” he said.
He said expected swings in the dollar and rand exchange rate have not been this low since late 1999. For this reason, Prescient expects the rand to weaken further.
Gold fell by 2.7% on Thursday and closed at $4 024 per ounce. On Friday morning it briefly dropped to $3 987 in Asian trade, before climbing back to about $4 010.
CNBC reported that the Nasdaq stock market closed almost 3% lower on Thursday. Shares in Meta Platforms, which owns Facebook and WhatsApp, fell 7% even after a positive earnings update.
Bloomberg reported that some analysts now believe the AI bubble may be bursting. “It may be that the AI bubble has started to burst,” said Tomoichiro Kubota, chief market analyst at Matsui Securities Co.
Kubota said falling share prices could make it harder for AI companies to raise money for their investments.
South African Reserve Bank Governor Lesetja Kganyago has warned about an AI bust since November 2025. He said such a bust would hurt the rand.
The S&P 500 index fell 1.2% on Thursday. Asian stock markets kept falling on Friday, but European markets showed signs of a small recovery when they opened.
Oil prices also rose after another attack on Saudi Arabia, The Wall Street Journal reported. Brent crude traded above $114 per barrel on Friday morning. It has been above $100 since the start of October.
Houthi rebels struck important Saudi infrastructure in Riyadh. In the Strait of Hormuz, three ships hit sea mines. Iran claimed it struck four ships in the Persian Gulf.
On the JSE, the All-Share Index dropped more than 1% on Thursday. By 10:00 on Friday morning, it was down about 0.3%.
Markets are now waiting for interest rate decisions from the US Federal Reserve and the European Central Bank next week. Both banks are expected to keep rates unchanged.
Source: this article is based on reporting by News24. Image: News24. Written with the help of AI and published by the Tzaneen Voice Business desk. See our Editorial Standards.
Anelisa Nkuna covers business and money news for Tzaneen Voice. Anelisa reports on the rand, fuel prices, interest rates, jobs, Eskom, Transnet, farming and company results. The aim is simple: explain what the numbers mean for household budgets, small businesses and workers in South Africa.