Battered rand succumbs to trade tension and slips back through the R15/$ level
The slide in the local currency is likely to put pressure on the Reserve Bank’s monetary policy committee when it meets to decide on rates this week
The rand was under pressure on Monday morning, weakening through the symbolic R15/$ level again, as global trade tension resurfaced.
The slide in the local currency is likely to put pressure on the Reserve Bank’s monetary policy committee, which is scheduled to decide on interest rates on Thursday.
A weaker currency increases the cost of imported products, including vehicle fuel, which in turn raises the prices consumers pay for goods.
Stats SA will on Wednesday release the latest figures on inflation, which is expected to have accelerated at an annual rate of 5.2% in August, from 5.1% in July.
The fresh slide in the rand came amid speculation that US President Donald Trump is poised to impose another round of tariffs on Chinese goods, upping the ante in the trade dispute between the world’s two largest economies.
The US president is reportedly ready to slap $200bn worth of Chinese goods, in a move that is expected to trigger retaliation from China.
Earlier in 2018, both countries imposed $50bn worth of tariffs on each other’s goods, raising concern about the potential effect on the global economy.
The rand is very sensitive to changes in global sentiment. Other emerging-market currencies were also under pressure, most notably the Turkish lira, which lost nearly 2% against the dollar.
By contrast, the dollar stood tall against a basket of currencies due to its safe-haven qualities.
At 9am, the rand was at R15.0079 to the dollar, from R14.9274. It was at R17.4534 to the euro from R17.3646, and at R19.6305 to the pound from R19.5091. The euro was at $1.1629 from $1.1626.
The yield on the benchmark R186 bond was at 9.195%, from 9.175%.