Rand treads water as threats of trade war subdue market
The rand was little changed against major global currencies on Friday afternoon, with investors cautious as focus shifted once again to issues of international trade.
On Friday, the White House formally announced it would impose $50bn in tariffs on Chinese imports in a bid to stop that country’s alleged intellectual property theft.
The move is expected to generate an immediate response from China, with US President Donald Trump saying the US would impose further sanctions on China should it retaliate.
The political wrangling had clearly unwound some of the dollar’s recent gains, said BK Asset Management MD Boris Schlossberg. Markets were clearly concerned that the ongoing trade dispute would damage international trade and put a damper on economic growth sooner or later.
Domestic and international data releases were on the sidelines, with eurozone consumer inflation for May earlier meeting expectations at 1.9% year on year. The labour index within that release, however, showed slightly higher-than-expected wage growth.
Locally, focus is on Eskom’s wage dispute, which on Thursday prompted the power monopoly to implement load shedding for the first time in years.
Eskom said on Friday that it could not guarantee power supply throughout the weekend.
Local bonds were marginally weaker, with the yield on the benchmark R186 rising to 8.98% from Thursday’s 8.93%.
At 3pm, the rand was at R13.4277 to the dollar from R13.4592, R15.5841 to the euro from R15.5656 and R17.8347 to the pound from R17.8535. The euro was at $1.1605 from $1.157.