Rand enters second day of losses, ignoring Trumps comments on trade optimism

The rand was weaker on Thursday morning on its second consecutive day of losses, as emerging markets brushed aside trade optimism comments from US President Donald Trump.

Remarks from Trump on Wednesday that the US and China could soon put an end to the prolonged trade war did little to lift the rand and other emerging-market currencies. Uncertainty pertaining to the trade war has heightened investor fears about the prospects of global economic growth, dampening risk appetite.

The local currency weakened above R15/$ for the first time in three weeks on Wednesday, as investors shied away from riskier assets as talks of impeaching Trump weighed on market sentiment.  

“In line with other emerging-market currencies, the local unit continues to buckle under the pressure of the risk-off sentiment currently gripping the market,” Peregrine Treasury Solutions treasury partner Bianca Botes said.

At 10.10am, the rand had weakened 0.33% to R15.0411/$, while the currency is still up almost 1% month-to-date, according to Iress. It had weakened 0.3% to R16.4564/€ and 0.19% to R18.5506/£. The euro was flat at $1.0943. 

“Offshore volatility and a weak commodity demand outlook are leading to the rand’s underperformance. SA’s high yields will be attractive for as long as there is stability offshore. But these yields may not be enough to keep the rand supported in an environment of rising market volatility,” Mercato Financial Services analyst Nico du Plessis said.

Gold added 0.32% to $1,508.56/oz and platinum 0.31% to $930.49. Brent crude lost 0.29% to $62.22 a barrel.

Statistics SA is set to release the producer price index for August on Thursday morning.  

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Source: businesslive.co.za