The rand was slightly firmer against major currencies on Monday afternoon, as global markets awaited more developments in the US-China trade war.
In the past week, events surrounding the trade negotiations have created a risk-off environment in global markets, with emerging-market currencies taking a knock.
The ongoing dispute between the two superpowers escalated further after Google suspended some of its business with Chinese telecom giant Huawei. This follows a move by the Trump administration to restrict Huawei’s access to US markets last week.
Emerging-market currencies firmed a little on Monday afternoon, with the Indian rupee leading the way after exit polls showed incumbent Prime Minister Narendra Modi was on track to win a second term.
At 2pm the rand was slightly firmer, gaining 0.31% to R14.3625/$, 0.3% to R16.0315/€ and 0.29% to R18.3004/£. The euro was flat at $1.1162.
Despite market sentiment being driven mainly by the trade-war developments, on the local front, all eyes will be on the appointment of a new cabinet, which is expected later this week. The markets will be watching to see if president Cyril Ramaphosa’s new appointees will help him execute his promised economic reforms.
“If he appoints people that actually understand business and investment and want to drive a pro-growth agenda, then it will be very well received,” Nedbank chief economist Dennis Dykes said. “There’s a great chance to make a very positive statement but if we see the same old, and particularly, if we get some of the bad apples back in cabinet, the market will be very sensitive to that.”
Gold was unchanged at $1,276.50/oz, while platinum was up 0.29% to $817.34. Brent crude added 0.62% to $72.54 a barrel, supported by concerns regarding the rising conflict between the US and Iran.