Rand softer as Theresa May heads to Brussels

The rand was slightly weaker against major global currencies on Thursday afternoon, but pared earlier losses after the European Central Bank (ECB) kept interest rates on hold.

The ECB’s decision was expected, with the bank further indicating it would end its asset-repurchase programme at the end of December. Its forward guidance was unchanged.

The primary focus of traders, however, was Brexit, with the pound managing to hold onto its gains against the dollar on Thursday. UK Prime Minister Theresa May fended off a no-confidence vote on Wednesday, but amid stiff opposition, with some analysts saying the chances of a hard Brexit had increased.

“For the time being markets continue to bet that cooler heads will prevail and that the UK will remain within the customs union in 2019, but the chaos and turmoil of British politics have undermined investor confidence and traders remain wary,” said BK Asset Management MD Boris Schlossberg.

At 2.52pm the rand was down 0.51% against the dollar at R14.1695, 0.59% to the euro at R16.1193 and 0.81% to the pound at R17.9418. The euro was flat at $1.1376.

The benchmark R186 government bond was unchanged at 9.15%.

Global markets were somewhat mixed, although some equities were finding support from positive developments out of the US-China trade negotiations. China has agreed to resume soyabean imports, while US President Donald Trump has said he will intervene if necessary in the trial of Huawei executive Meng Wanzhou.

Local news had little effect on the rand’s movement, with producer inflation, as measured by the annual change in the producer price index, rising to 6.86% in November, as expected.

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