Rand on shaky ground as emerging-market jitters rumble on

The rand looked frail on Monday morning, after suffering its worst monthly performance in two years.

But local bonds held broadly steady, suggesting that local buyers were taking advantage of higher yields on offer. Foreigners continued to bail out of local bonds and shares, according to the JSE’s weekly stats data.

Nonresidents were net sellers of local bonds to the value of R4.4bn over the past week, bringing total sales to just more than R47bn in 2018. Net equity sales totalled R3.8bn last week.

Emerging markets as an asset class have been under pressure recently, affected by an array of factors including concerns about Turkey’s economic crisis.

The value of the rand dropped nearly 11% to the dollar in August, leading to the expected increase in fuel prices in September.

US-China trade dispute continued to bubble beneath the surface, undermining the so-called risk-on sentiment. The US is set to impose an additional $200bn of imports from China, upping the ante in the trade dispute that analysts have warned could hurt global trade.

Oanda analyst Stephen Innes said in an e-mailed note to clients that investors pulled back from risk assets due to emerging-market concerns, as well as jitters that US President Donald Trump carry out his threat to impose tariffs on China.

At 10.30am, the rand was at R14.7229 to the dollar, from R14.6650. It was at R17.0985 to the euro from R17.0331 and at R18.9945 to the pound from R18.9761.

The yield on the benchmark R186 bond was at 9.005% in midmorning trade, from 8.97% at its last settlement on Friday.

Source: businesslive.co.za