Picture: REUTERS/JASON LEE
Picture: REUTERS/JASON LEE

The rand held onto its earlier gains on Monday afternoon, continuing to be lifted by a surge on risk-on trade after the US and China agreed to a truce in their ongoing trade war.

US President Donald Trump and Chinese Premier Xi Jinping’s agreement of a three-month halt to further trade actions has lifted markets, which were also digesting a surging oil price on Monday.

Brent crude rose over 5% on both the news of the trade truce, as well as ahead of a key meeting of oil-cartel Opec this week, which is widely expected to result in hefty production cuts.

The trade conflict has been one of a number of negative factors that has dragged oil lower over the last couple of months, and even now it is trading around 30% off its peak, said Oanda analyst Craig Erlam.

At 2pm the rand was 0.49% firmer against the dollar at R13.6724, 0.67% against the euro at R15.4931 and 0.85% against the pound at R17.3905. The euro was 0.17% weaker at $1.1333.

Earlier, local news was somewhat positive, with the Absa purchasing managers’ index (PMI) for November climbing to 49.5 index points in November, from a depressed reading of 42.4 in October.

Operating conditions for the manufacturing sector looked set, however, to remain challenging, said Investec economist Kamilla Kaplan.

gernetzkyk@businesslive.co.za