Rand weakens a touch as markets await next move in US-China trade war
The rand was slightly weaker on Wednesday afternoon as markets waited for further developments in the US-China trade war.
Positive sentiment has followed the ANC’s victory in the national elections, but this has been offset by escalating tension between the US and China. The US increased tariffs on $200bn worth of Chinese imports to 25% last Friday, with China retaliating by announcing a similar tariff increase on $60bn worth of US imports.
Despite the increased volatility caused by the ongoing battle between the two economic superpowers, some analysts are confident that the trade war will not prompt significant weakness in the rand.
“What we’re seeing with the trade war rhetoric is that you’re moving around a risk-on backdrop,” Rand Merchant Bank fixed-income analyst Kim Silberman said. She said if the environment were risk-off, the rand would be trading closer to R14.80/$ to R15/$.
“It will fluctuate around R14.30/$ with the changes in the rhetoric of the trade war, which could go either way in the next couple of days.”
At 2.30pm, the rand had weakened 0.24% to R14.2787, 0.11% to R15.9761/€ and 0.02% to R18.3841/£. The euro was 0.13% softer at $1.1189.
Gold rose 0.21% to $1,299.56/oz, while platinum fell 0.82% to $849.63; Brent crude was flat at $70.80 a barrel.
The bid on the benchmark R186 government bond had fallen 2.5 basis points to 8.45%. Bond yields move inversely to bond prices.
Earlier, data from Statistics SA showed retail sales grew just 0.2% year on year in March, lower than the 0.6% Bloomberg consensus.
Source: businesslive.co.za
