Rand reaches two-week low against the dollar in risk-off trade
The rand was weaker against major global currencies on Friday afternoon, faring worst against the dollar, as investors shied away from risk assets in general.
The risk aversion followed disappointing earnings reports from US tech companies on Thursday, said Oanda analyst Craig Erlam. More than a quarter of the S&P 500 will report on the third quarter next week so there is plenty of opportunity to turn things around, but sentiment has been well and truly dampened recently.
A volatile Chinese yuan also weighed on sentiment, falling to a 10-year low against the dollar in overnight trade on Thursday. The depreciating Chinese currency may worsen tension with the US, analysts said. The White House has previously accused Beijing of artificially weakening the yuan in order to offset the effects of tariffs imposed by the US.
Locally, the medium-term budget policy statement has drawn cautious responses from ratings agencies Fitch and Moody’s, who have both expressed concern about SA’s rising budget deficit.
Global focus on Friday was on the US, with third-quarter GDP coming in at 3.5% quarter on quarter, compared to the Trading Economics’ consensus forecast of 3.3%.
At 3pm the rand was at R14.6923 to the dollar from R14.6271, at R16.6722 to the euro from R16.6367, and at R18.8063 to the pound from R18.7392. The euro was at $1.1345 from $1.1373. At the same time, the benchmark R186 government 10-year note was bid at 9.35% from 9.37%.
Source: businesslive.co.za
