The rand was being affected by the Russian rouble's depreciation because they exported similar commodities, and could be seen in the same emerging market basket, an economist said.
The rand has fallen to levels against the US dollar last seen in 2008, when it reached a low of R11.93 to the US dollar in September of that year. As of early trading on Thursday, the rand was at R11.57 to the US dollar, having ended on R11.68 on Wednesday. The Russian rouble meanwhile lost around half of its value against the US dollar this year.
Mike Schussler, economist and owner of www.economists.co.za, said Russia was a major commodity supplier, being the world's second biggest supplier of platinum and biggest supplier of palladium.
“If the oil price drops, they might have to resort to selling their platinum stocks, and palladium, which influences those commodity prices,” he said. “They have a similar basket of commodities to SA, other than oil. Where they have oil to sell, we have coal.”
Russia had large gold reserves, and to keep the rouble afloat, might resort to selling gold.
“The fact the oil price is low will drag down the coal price. The fact of the matter is those are three of our four biggest export commodities,” he said. “These commodities, such as coal, platinum, and gold, have dropped in price.”
This meant South Africa's current account was going to be under pressure, which meant the rand would remain under pressure.
“Those are the factors we need to take into account here,” Schussler said.
“They - Russia - may sell those commodities and, as we saw in 1998, people did draw a line from them to us and it didn't come immediately, but it continuously played out in other emerging markets like Thailand and South Korea at that stage, and eventually it bounced back on us.”
The rand was also seen as a gauge for emerging market currencies.
“The emerging market association generally speaking, and commodity markets, will also come into play,” Schussler said.
That would see the market beginning to think how South Africa would start getting out of the current account deficit hole.
“The one thing that markets do, there is a very big nudge in one direction or another, then the herd mentality follows,” Schussler said.
“Once people start asking who else it can be, the rationale then spreads.”