Picture: 123RF/LEON SWART
Picture: 123RF/LEON SWART

The rand was weaker on Monday morning, reflecting the reality check that a trade dispute between the US and China may not be resolved overnight.

Markets surged late last week, pulling the rand along with them, when US President Donald Trump tweeted on Thursday that the world's two biggest economies were making progress to resolve the tit-for-tat tariff dispute, which is threatening to hurt the economy.

As a highly liquid currency, the rand is a good barometer of risk-on/risk-off trade. But White House economic adviser Larry Kudlow has since tempered optimism of a quick resolution to the dispute, which has held markets hostage for months.

The renewed trade concerns were compounded by high US treasury yields and a strong dollar, following the better-than-expected US jobs report on Friday, which supported the case for continued increases in US interest rates.

Higher US rates have contributed a great deal to bond outflows. Foreigners were net sellers of local bonds worth just more than R3bn over the past week, bringing the year-to-date net outflows to R55bn.

"The longer the rise in [US] yields continue, the greater the pressure on emerging markets as the US will become a favoured destination for investors," TreasuryOne currency dealer Andre Botha said in an e-mailed note to clients.

The yield on the benchmark US 10-year paper was 3.19% in European trading session, boosting the dollar at the expense of the rand, which lost nearly 1%

Local bonds were weaker, with the yield on the R186 bond fetching 9.20%, from 9.175% at its last settlement on Friday.

At 10.23am the rand was 0.93% weaker against the dollar at R14.3966, 0.91% weaker against the euro at R16.3927 and 0.70% down to the pound at R18.7104. The euro was little changed at $1.1387