SA stocks lose R1 trillion over the past week due to the US banking collapse fear and load shedding.

Due to the collapse of Silicon And Signature bank in America, there have been rampant market fears over the stability of the US banking system. This has caused the selling off of stocks as people are quick to try to hold on to their money, however, this selling of stocks has also negatively affected the JSE as in just space of a week almost a trillion rands worth of value has been whipped out since the panic selling. How will this affect the value of the rand in the current economic environment of South Africa Currently？

The current market fears over the banking collapse have many people panic selling in the markets which means there is bound to be volatility in the markets, especially with the upcoming interest rates announcements coming next week. If you are planning to take advantage of the fast movement then I recommend you find a broker with small fixed spreads and fast transaction speeds from WikiFx. WikiFx has an app that will help you directly compare brokers by the spreads they offer. They curate the list of brokers to give you the best regulated and verified brokers worldwide, so you can trade with the best brokers without the hassle of being scammed.

Why is everyone panicked about the recent SVB collapse？

The moment you say bank collapse, every trader's mind hearkens back to the 2008 financial crisis caused by mismanaged loaning practices and the housing bubble caused by the US banking system. The US is the most traded currency in the world as it is the biggest economy as well, hence multiple multinational establishments hold entities and stocks that are valued in Dollars. When something drastic affects the dollar it affects almost everything else in turn, hence why the fall of these banks has been hyped up to what it is.

The collapse of these US Banks has caused more people to move their assets outside of the reach of the US banking system in the case that these closures do not affect their assets, however, this selling pressure has caused stocks all over the world to fall in value including that of the JSE which saw 1 trillion rands worth of value wiped clean off. This loss in stock value is also due to the consistent load shedding in South Africa as businesses as struggling to run operations without electricity.

How will this affect the USDZAR

At the moment the Rand is not having a good day as we are above 18.3 levels and it would seem that the loss of stock values will cause a further fall of the rand. Next week we will also be receiving the interest rates announcement for the US, and will Powell Promising more interest hikes in the future there is likely going to be an interest rate hike which will further strengthen the US and cause the USDZAR to rise even further. Best be prepared for further losses in the ZAR.