Rand’s recovery hits snag as global sentiment sours
Nedbank analysts say the local currency is likely to consolidate after almost three weeks of weakness, but on a multi-month view global headwinds may persist
The recovery in the value of the rand hit a snag on Monday morning, with the apparent re-emergence of global trade concerns serving as an excuse for market players to shy way from risky assets.The risk-off trade played out in weaker equities.The rand has recently been caught up in the crossfire of a trade spat between the US and China, leaving many wondering about the potential effect on the global economy.As one of the most liquid currencies, the rand is sensitive to global risk perceptions.Last week, the unfavourable global environment coincided with a batch of disappointing economic data, helping to push the rand to nearly R14/$, its weakest since late November.A weaker rand fuels inflation and could force the hand of the Reserve Bank to raise interest rates, just when growth is languishing.But the rand has since made modest recovery from last week’s lows, with analysts pointing to technical factors behind its recovery, as well as higher local government bond yields, which they h...
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