Rand rebounds on US-China trade talk news

The rand gained more than 1% early on Wednesday as emerging markets bounced back on news that a Chinese delegation will travel to the United States in August for trade talks.

The prospect of the world’s two biggest economic powers preventing a looming trade war boosted investor sentiment after a worrying week for emerging markets in the wake of a currency slump in Turkey.

At 0539 GMT, the rand traded 1.39% stronger at 14.36 versus the US dollar, after sliding more than 2% in the previous session on concerns over a weak domestic economic outlook and planned land reforms.

The rand is down around 6% in the past week as investors have dumped assets seen as risky in the wake of the Turkish lira’s plunge. The lira has weakened 36% against the dollar this year.

The rand, one of the most-traded emerging market currencies, is highly susceptible to swings in sentiment on global markets.

Analysts have said the rand is likely to recover once fears over the Turkish economy recede.

South Africa has a narrower current account deficit and smaller stock of short-term external debt than Turkey.

Government bonds were stronger in early deals, with the yield on the benchmark government bond maturing in 2026 down 7 basis point at 8.950%.