Rand on shaky ground despite global risk-on trade

The rand was uncertain in midmorning trade on Monday, moving in the opposite direction to risk assets such as equities, which were mostly positive.

The local currency usually strengthens in a risk-on scenario, where investors feel confident to buy assets that are deemed risky.

Even so, the rand’s slow start to the new week came against a sturdy performance over the past week, though the rally then came off a low base.

New catalysts were few and far between in early trade, but the Turkish lira showed renewed signs of stress as it fell 2% against the dollar, following the relative calm last week when the country’s markets were shut for a holiday.

Earlier in August, global markets fell sharply amid concern that the Turkish economic crisis could spread.

FXTM global head of currency strategy and market research Jameel Ahmad is concerned that SA could be next to face the wrath of US President Donald Trump. That weighed on the rand.

Over the past week, Trump weighed in on the heated land reform debate in SA through controversial twitter comments, which the presidency labelled as “uniformed”.

South African bonds were steady in midmorning trade, though better off compared to two weeks ago when the yield on the benchmark R186 bond crossed the 9% mark.

At 10.42am, the yield on the R186 was at 8.88%, from 8.89% at its last settlement on Friday.

The rand was at R14.2807 to the dollar, from R14.2514. It was at R16.5905 to the euro from R16.5560 and at R18.3420 to the pound from R18.3068.