Rand snaps five-day losing streak as China contains currency fall
The rand was firmer on Tuesday afternoon — the second-best-performing emerging-market currency — as calm returned to the markets after China dialled back its currency weakness, easing trade-war jitters that saw the rand test the R15/$ level on Monday.
The People’s bank of China (PBOC) acted on Tuesday to contain the yuan’s weakness after it plunged below 7/$ after US President Donald Trump imposed a 10% tariff on Chinese imports worth $300bn last week.
Markets are relieved at the PBOC’s decision to weaken the yuan at a slower pace, a sign that we might not see “peak escalation in the US-China trade war just yet”, senior market analyst at Oanda Edward Moya said. “China’s currency decision is probably more of a move to deliver some stability following Monday’s collapse and not a reaction to any action or rhetoric from the US. Since tariffs have come into play, China has been steadily lowering the yuan to offset the tariffs.”
At 2.20pm, the rand had strengthened 0.81% to R14.8058/$, 0.99% to R16.5595/€ and 0.51% to R18.0325/£. This was the rand’s first day of gains in five against the dollar. The euro was 0.17% weaker at $1.1184.
The benchmark government 10-year bond was stronger, with its yield falling 2.5 basis points, or 0.025 percentage points, to 8.4%, after earlier reaching a two-month high. Bonds yields move inversely to bond prices.
Gold was flat at $1,465.15/oz while platinum had fallen 0.11% to $856.57. Brent crude gained 0.5% to $60.2 a barrel.
Source: businesslive.co.za
