Rand weakened on Tuesday as waning hopes of a swift resolution to the U.S-China trade war overshadowed news of the economy snapping out of recession in the third quarter and surpassing economists’ expectations.
Stocks were firm but pared some of Monday’s gains following the trade war truce between the U.S and China as investors awaited detail.
The rand was trading at 13.7500 per dollar by 1522 GMT, 0.44% weaker than its close in New York of 13.6900. The currency had firmed more than 1%, hovering near four-month highs, and touched an intraday low of 13.5425.
Government bonds also weakened, with the yield on the benchmark bond due in 2026 rising 1 basis point to 8.930%.
“The rand has given up much ground despite the strong rebound in the economy, which will create a supportive environment for revenue growth,” said ETM economist Halen Bothma.
Africa’s most industrialised economy expanded 2.2% in the third quarter, snapping out of recession after a revised 0.4% contraction in the second quarter in a boost for President Cyril Ramaphosa, who has pledged to re-start growth after a decade of stagnation under his predecessor, Jacob Zuma.
Economists polled by Reuters had predicted a 1.6% expansion.
Optimism over a rapprochement between U.S President Donald Trump and China’s Xi Jinping at the G20 meeting was replaced by scepticism, as none of the commitments that U.S. officials said had been given by China were agreed to in writing and specifics were yet to be hammered out.
In equities, the All Share index rose by 0.29% to 52,228 points while the Top 40 index was 0.28% firmer at 45,180 points.
Gold stocks rose 2.27% led by AngloGold Ashanti which closed 3.39% firmer at R144.40.
“Yesterday was such a big day and the pull back in the stocks is not unusual at all. Not much detail about the trade deal has been provided yet so there is still uncertainty in the markets,” said Wayne McCurrie, FNB Wealth and Investments portfolio manager.