Picture: REUTERS/DADO RUVIC
Picture: REUTERS/DADO RUVIC

The rand reached a three-week low against the dollar on Monday afternoon, as investors watched to see whether a contentious Brexit vote would take place in the UK Parliament, helping to fuel risk aversion on global markets.

That vote could cause volatility in the pound, should lawmakers reject UK Prime Minster Theresa May's draft agreement on Britain’s departure from the EU. On Monday, the pound fell sharply after speculation that May, fearing a likely defeat on Tuesday, was set to postpone the vote.

Investors are also waiting for a series of local economic data releases this week.

At 2pm the rand was 0.45% weaker against the dollar at R14.236, 0.65% against the euro at R16.2496 and 0.18% against the pound at R18.0378. The euro was 0.2% weaker at $1.1415.

At the same time the bid on the benchmark R186 government 10-year note was at 9.14% from 9.03%.

Downbeat economic data releases out of both Japan and China served as a reminder that a cloud continues to hover over global economic growth prospects.

Comments from a US official suggesting the White House would take a hard line against China should no trade agreement be reached by March next year also helped sour the mood on global markets.

The euro, which the rand often tracks, is also under strain as tax protests in France continue.

Europe’s second-largest economy was now likely to see a sharp downturn in activity as a result of the protests over the past few weeks, said BK Asset Management MD Boris Schlossberg. “That’s bad news for the continent as a whole especially if the European Central Bank continues on its path to taper which could exacerbate the contraction in demand by tightening credit at the worst possible time.”

gernetzkyk@businesslive.co.za