Rand suffers fresh assault on global growth anxiety
Local currency weakens as the uncertain global environment spoils investors’ appetite for risky assets
The rand lost ground on Thursday morning, as the uncertain global environment spoilt investors’ appetite for risky assets.
The fresh market jitters came after technology titan Apple cut its quarterly sales forecast for the first time in years, fanning the growing concern of a slowdown in global growth.
The local currency fell as much as 1.66% to R14.7017/$ in early Asian trading, according to Bloomberg data. This was its worst level in two months, although it did subsequently recover some ground.
The local currency is often viewed as a barometer of sentiment towards emerging markets, which are vulnerable to changes in investor sentiment because they are generally perceived as risky.
The yen was a standout performer due to its safe-haven qualities, although analysts say thin trading conditions amplified its nearly 2% gain against the dollar.
Gold price, which tends to thrive in uncertain times, pushed to its highest point since June 2018 — about $1,289.94/oz.
“The tone at the moment is that the market is starting off the year on a risk-off footing, which can cause some rand weakness in the short term,” said Andre Botha, senior currency trader at TreasuryOne.
The rand weakness, if pronounced, could temper the net positive effect of much lower international oil prices.
Brent crude stabilised around $54 a barrel, which was close to its weakest level since October 2017, boding well for the outlook on inflation.
Local bonds held steady in early trade, with the yield on benchmark R186 bond fetching 8.915% from 8.925%.
At 9.33am, the rand was 0.44% weaker against the dollar at R14.5280, 0.72% against the euro at R16.5228 but flat against the pound at R18.2464. The euro recovered 0.26% against the dollar at $1.1372.