MARKET WRAP: The rand powers to its best 2019 gains

The rand powered to its best level in five months on Monday, moving below R14/$ shortly before the JSE opened and ending slightly weaker at the close.

So far in December, the rand has gained 4.7% to the dollar, making this its best month since January, when it appreciated 7.65% to the greenback. It came in as the second-best performing emerging-market currency over the past month, according to Bloomberg data, only marginally eclipsed by the Mexican peso.

Much of the dollar’s weakness, particularly since Friday, has been driven by improved sentiment towards emerging markets as the prospects of reaching a first phase of a US-China trade deal grow. The trade war between the world’s two biggest economies, which will enter its third year in January, has had a deleterious effect on global GDP growth, with emerging markets bearing the brunt of it.

At 5.02pm, the rand was 0.43% weaker at R14.0872/$, 0.62% down at R15.7787/€ and 0.96% softer at R18.4966/£. The euro strengthened 0.23% to $1.1201. The JSE climbed for the third time on Monday, led by a strong rand and the banking index gaining on the day.

Asian markets were mixed and European markets mostly negative, as the trade volumes remained thin ahead of the new year and with markets generally continuing to ride the wave of optimism of a US-China trade deal being signed.

On Sunday, China’s commerce ministry said that it has dealt with trade fictions with the US proactively and that it is in close communication with the US about signing. Earlier, the Shanghai Composite had gained 1.16%, Hong Kong’s Hang Seng 0.33%, while Japan’s Nikkei 225 fell 0.76%.