Rand weakens as trade war sours risk demand

The rand retreated on Wednesday after the United States threatened to impose tariffs on another $200 billion worth of Chinese imports, cooling risk demand that had seen the currency rally to its best in three weeks.

At 0700 GMT the rand was 0.58% weaker at 13.40 per dollar compared with the close of 13.33 overnight in New York.

The surprise move by the United States reignited fears of a trade war between the world’s two biggest economies that risks derailing a global economic recovery.

Emerging currencies suffered across the board, with investors opting for safer bets after the first half of the week had seen sentiment slightly favour riskier assets.

As a result the dollar rose 0.1% in early trade against a basket of currencies.

Analysts said the rand would trade cautiously in a narrow range between 13.30 and 13.60.

Read: More pain for rand to come

Bonds were also weaker, with the yield on the benchmark bond due in 2026 up 3 basis points to 8.7%.

The Johannesburg Stock Exchange’s Top40 index opened down 1.35% at 51 094 points.