S. Africa Rand Dives, Markets in Turmoil

The financial markets in South Africa were in turmoil and the value of the currency, the rand, nose-dived today, one day after President Pieter W. Botha’s tough speech rejecting quick major reforms in the government’s apartheid racial segregation policies.

A rand was worth 38.50 U.S. cents, while one British pound cost 3.65 rand in today’s trading--record lows for the rand in each category. The currency also dropped sharply against all other major currencies.

Business leaders expressed disappointment after Botha effectively dashed hopes of immediate political reform in this strife-torn nation.

Economists and financial analysts said Botha’s speech and the subsequent steep depreciation of the local currency could accelerate the nation’s inflation rate, now at 16.4%.

In Bad Recession

It could also cause interest rates to remain high and seriously delay any recovery from the nation’s worst recession in 50 years, they said.

“The rand probably overreacted, but with the continuing state of emergency, interest rates will remain somewhat higher than they would have been otherwise, and that will delay an economic recovery,” predicted Johan Cloete, chief economist at Barclays National Bank Ltd., the nation’s biggest bank.

Earlier glimmers of hope for economic recovery are completely overshadowed by South Africa’s deteriorating political situation, other analysts said.

“The economic fundamentals are not all that bad,” said Ian Lamont, a partner at the investment firm Ivor Jones Roy Inc. “But now a lot more companies are going to go to the wall because interest rates will have to stay high and the markets are reacting to political influences.”