Rand at seven-month low as SA awaits cabinet announcement
The rand weakened past R14.80/$ on Wednesday morning amid global risk-off trade and local political issues adding to uncertainty.
US equity markets posted sharp losses on Tuesday on concerns that the US-China trade war will prompt a global economic downturn.
Weak global economic data was heightening these concerns, fuelling fears of a global recession, London Capital Group head of research Jasper Lawler said in a note. “An unresolved Brexit and rising tensions between Rome and the European Commission are adding to the gloomier outlook.”
Domestic politics also added caution for local risk assets, with President Cyril Ramaphosa’s delayed cabinet announcement leaving investors to ponder the balance of power within the governing ANC, and therefore the scope and pace of its promised policy reforms.
The rand had fallen 2.11% against the dollar on Tuesday, its worst performance since February, amid delays over the cabinet announcement and concerns about the future of Eskom.
At 9am on Wednesday the rand was 1.04% weaker at R14.8809/$, 1.02% softer at R18.826/£ and 1% weaker at R16.6033/€. The euro was flat at $1.1157.
The benchmark R186 government bond had weakened, with its yield rising eight basis points to 8.42%. Bond yields move inversely to bond prices.
Local bonds were expected to be under pressure on Wednesday, though they could find some support if a cabinet is announced that comprises reformist politicians, Sasfin Wealth fixed-income trader Alvin Chawasema said in a note.
Source: businesslive.co.za
