Rand’s volatility climbs to four-month high
The rand was a little firmer against major global currencies on Monday morning, but volatility remains elevated, amid market jitters over the US-China trade war.
International markets were thrown into turmoil last week due to threats of an escalation of the protracted trade conflict between the two largest economies, the latest development being US President Donald Trump’s comments on Friday that trade talks scheduled for September may be called off.
The rand’s implied one-week volatility is the highest among currencies tracked by Bloomberg. At 18.45%, this is the highest volatility in the currency since March 29, when emerging-market currencies were put on the back foot by pre-election weakness in the Turkish lira.
At 9am the rand was flat at R15.2735/$, R17.1126/€ and R18.4036/£. The euro was flat at $1.12.
The benchmark R186 government bond due in 2026 had weakened, with its yield rising seven basis points to 8.45%. Bond yields move inversely to bond prices.
The rand has been the worst-performing emerging-market currency over the past 30 days, losing about 8.63% during this period.
It has taken only three weeks for the rand to move from R13.85/$ to R15.30/$ and there has not been a sign of any kind of correction yet, said Standard Bank currency dealer Warrick Butler in a note.
“For the most part, the domestic environment is the contributor to this … we don’t need Trump to create an insecure environment,” Butler said.
Investor concern over a ratings downgrade by Moody’s Investors Service is weighing on sentiment, said Butler, adding that the issue of President Cyril Ramaphosa’s battles over his ANC election campaign funding was also a factor.
Source: businesslive.co.za
