Any hopes of policy support for the rand from the South African Reserve Bank (SARB) have vanished.  The currency fell 1 percent after yesterday’s SARB meeting where  Governor Gill Marcus made it clear she would not be standing in the way of the rand’s move south. It is now trading at 9.32 per dollar.

More losses look likely, especially if foreign bond investors throw in the towel, a move which analysts at Societe Generale liken to “the market equivalent of a volcanic eruption”. Foreigners, after all, own more than 36 percent of the 1 trillion-rand market in local currency sovereign bonds.

Bearishness appears to have escalated since a Reuters poll of 32 analysts conducted in early-March.  Back then the mean forecast for the rand’s exchange rate in a month’s time was 8.94 per dollar, the poll found.  The 12-month mean forecast was for 8.787.

In a note this morning, Societe Generale said there was  “considerably more pain coming now that the central bank is not ready to provide some sort of backstop”.

Clearly, markets had expected a stronger statement from Marcus, who did recently say she thought the rand move looked “overdone”.  But the SARB has typically taken a more laissez-faire approach towards currency weakness. And right now there is another reason for this attitude — there is very little ammunition to mount any sort of defence of the rand.