Rand keeps steady despite global growth jitters

The rand held up reasonably well on Thursday morning despite poor global sentiment.

The rand tends to be a good measure of global risk-on/risk-off trade, but the correlation was absent in early trade, with the rand firming while equity market losses deepened.

There were no clear, new catalysts in play for the sour mood in global markets, other than continuing trade war concerns. Technology stocks worldwide were under renewed pressure, contributing to the poor sentiment.

US treasury yields pulled back from seven-year highs, dragging the dollar along with them, which in turn took pressure off the rand and other emerging-market currencies.

South African bonds were also spared in the sell-off, with the yield on the benchmark R186 bond little changed at 9.245% in early trade, from 9.220% at its last settlement.

The rand and local bonds have been highly volatile in recent months, making it difficult to discern a trend.

“Not a day goes by that we do not speak of trade wars, mulling over the possible fall-out from the imposition of protectionist measures. Various economic loss estimates have been tabled but there are few approximations of the impact on financial markets,” said Nema Ramkhelawan-Bhana, analyst at Rand Merchant Bank.

“Suffice it to say that global stocks are bearing the brunt of market concern, losing value progressively as investors question the damage to corporate earnings from the trade dispute at a time when borrowing costs are spiralling.”

At 10am, the rand was at R14.6982 to the dollar from R14.7873, at R16.9626 to the euro from R17.0310 and at R19.3817 to the pound from R19.4911. The euro was at $1.1540 from $1.1517.