The rand has just lived through another massive meltdown - it lost 16% of its value in less than four days, until it started to recover on Monday night.
This counts as one of the top five biggest crashes in the past eleven years, according the calculations of independent market analyst Johann Biermann.
Using intraday trading data, he compiled the following list of the largest slumps in the local currency against the dollar:
The rand went in meltdown mode during this extremely turbulent time. The housing boom in the US gave rise to a subprime lending crisis: people who couldn't afford it, were given large mortgages. These dud mortgages were then sold off to banks through intricate financial instruments, which triggered a massive confidence crisis in the financial sector, eventually pushing it to the brink of collapse.
Investors sold off risky assets - particularly in emerging markets - and fled to the safety of the US dollar, which saw massive gains during this time.
The crisis in the eurozone during this time caused turmoil all around the world. As ratings agencies downgraded Italy, and investors worried about the stability of the eurozone, there was a massive influx into save haven currencies like the US dollar and Swiss franc. Investments in emerging markets all but dried up.
This sharp fall was due to the infamous ‘taper tantrum’: a global sell-off triggered by the surprise announcement by then Fed chair Ben Bernanke that the US central bank is considering scaling down quantitative easing, the massive amounts of money it pumped into global markets. Over the course of 2013, the rand lost almost a quarter of its value.
The latest rand shock originated in Turkey, where the economic fallout from a diplomatic spat with the US soon snowballed into grave concerns about the Turkish debt situation. Foreign-denominated loans now represent half of its GDP, and its president’s meddling in monetary policy aggravated investor concerns.
While the EU had approved a bail-out package for Greece by this stage, the eurozone crisis was still in full swing. During this time, US bond yields spiked to above 3% and investors ditched emerging market assets, including the rand.
The rand’s steep fall was triggered by a shock slump in the Chinese market. Chinese authorities repeatedly had to halt trading after sharp declines in share prices. This instability triggered large losses on global markets and – as China is the world’s biggest consumer of commodities - compounded the slump in metal prices. As a large platinum and gold producer, South Africa was hit hard.
Pravin Gordhan was fired as finance minister on March 30th, which caused havoc in the local market and was followed by credit rating downgrades.
The rand fell victim to more uncertainty about the eurozone in the run-up to elections in Greece, with investors fearing that an anti-austerity group of parties could force a "Grexit".
This was a grim period during the global financial crisis, with massive losses among banks, which continued to receive emergency capital from governments. The MSCI World Index lost more than 9% during this time. In a single quarter, Japan’s economy shrank by 12% and Germany saw a 2% decline in its GDP.
The rand took a hit amid rumours that the then Finance Minister Pravin Gordhan was on the verge of being arrested. This followed a report that Gordhan was summoned by the Hawks to answer charges relating to a so-called rogue unit in the SA Revenue Serivce.
On 9 December 2015, then president Jacob Zuma replaced respected finance minister Nhlanhla Nene with ANC MP David van Rooyen. A sharp sell-off followed, which was halted by the appointment of Pravin Gordhan.
Also from Business Insider South Africa: