Rand back above R14.80/$ amid pressure on emerging-market currencies
The rand was weaker against major currencies on Friday morning as the US’s threat to impose tariffs on Mexico placed pressure on emerging-market currencies.
In the midst of the escalating trade tension between the US and China, US President Donald Trump announced a 5% tariff on Mexican imports due to the illegal immigration crisis between the two countries.
“Until such time as illegal migrants coming through Mexico, and into our country, STOP. The tariff will gradually increase until the illegal immigration problem is remedied,” Trump said on Thursday.
The Trump administration said in a statement that the 5% tariff will be in effect on June 10 2019, raised to 10% in July, 15% in August, 20% in September and 25% in October.
The announcement weighed on the Mexican peso, which was the worst performing among emerging-market currencies on Friday morning. The rand was the third worst performing.
At 9.30am the rand had weakened 0.73% to R14.8302/$, 0.79% to R16.5172/€ and 0.74% to R18.7048/$. The euro was flat at $1.1139.
“The rand landed in treacherous terrain this week, reaching a seven-month low of R14.86/$, as the global backdrop continues to place excessive pressure on emerging markets. While liquidity of the South African market is often highlighted as a positive factor, it also causes the rand and rand-denominated assets to be sold off as a proxy for other more illiquid emerging market assets” said corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes.
The benchmark R186 government bond had weakened, with its yield rising 5.5 basis points to 8.52%. Bond yields move inversely to bond prices.
Gold rose 0.48% to $1,294.52/oz and platinum fell 0.51% to $792.27. Brent crude fell 2.62% to $64.72 a barrel.
Locally, trade of balance, money supply and manufacturing purchasing manager’s index (PMI) figures are set to be released on Friday.
Source: businesslive.co.za