Rand slips to R14.90/$ as volatility picks up
The rand remained under pressure on Monday afternoon, near a two-month low against the greenback, as investors scampered for safety amid an escalating US-China trade war.
US President Donald Trump last week threatened to levy an additional 10% in tariffs on $300bn worth of Chinese goods on September 1, with Beijing threatening to respond with its own measures, including halting US agricultural imports.
The Chinese yuan has sharply depreciated, with analysts saying the “gloves are off” in the trade spat between the world’s largest economies. China allowing the yuan to depreciate was a sign it was retaliating to the threat of US tariffs, being unable to match them completely due to a trade surplus with the world’s largest economy.
“With little in the way of good news, we can expect the rand to test the R15/$ level with risk sentiment currently hugely in favour of safe-haven assets,” said TreasuryOne senior dealer Andre Botha.
While the rand could find some support from safe-haven interest in gold, the currency is also under pressure from concern over Eskom’s debt levels, as well as last week’s downgrade warnings from Fitch Ratings and Moody’s Investors Service, said IG market analyst Shaun Murison.
The rand tends to benefit from a higher gold price, as it is a key earner of foreign exchange.
At 2pm the rand had lost 1.07% to R14.9118/$, 1.7% to R16.6676/€ and 1.25% to R18.1337/£. The euro was 0.63% firmer at $1.117.
The benchmark R186 government bond had also weakened to a one-month worst, with the yield rising nine basis points to 8.45%. Bond yields move inversely to bond prices.
The rand was only the fifth-worst-performing emerging-market currency tracked by Bloomberg on Monday morning, but it is the most volatile, at a two-month high, on a one-month basis.
Source: businesslive.co.za
