SA and emerging-market peers already hit by US-China trade war
Commodity currencies are taking a beating, and the rand is ‘as vulnerable as taking a naked summer swim with jelly fish’, says one economist
Lagos — Just when it looked like things couldn’t get much worse for emerging markets, along comes a trade war. And it’s hitting emerging-market commodity suppliers and exporters to China especially hard. Take SA and Thailand, which each ship about 20% of their foreign-bound goods to China. China buys more than half of SA’s raw-material exports. The rand is down 1.9% this week, the most among 24 major emerging currencies tracked by Bloomberg, and near a seven-month low. The Thai baht has just reversed year-to-date gains against the dollar. The pain is evident in raw material prices. The Bloomberg commodity index has slumped 4.2% this month, its worst performance since July 2016, while the London Metal Exchange LMEX Index was down 5.8% in the five days through Wednesday. "If the setback for trade is big enough to slow down the global economy, which is likely to be the case, you’d expect commodity prices to decline or no longer rise," says Cristian Maggio, head of emerging-market strat...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.