The dollar and the rand. Picture: REUTERS, SIPHIWE SIBEKO
The dollar and the rand. Picture: REUTERS, SIPHIWE SIBEKO

At the weekend, the rand strengthened back under R14/$, R16/€ and R18/£ — a dramatic recovery from Wednesday night’s “flash crash” in which the currency spiked at R14.70/$, R16.65/€ and R18.40/£.

The rand reached R13.91/$, R15.88/€, and R17.69/£, taking it to levels last seen a month ago.

Image: Iress

The currency was holding on to most of its weekend gains on Monday morning, trading at R13.92/$, R15.91/€ and R17.75/£ at 6.30am.

Data released by the Tokyo Financial Exchange gave some clues to what caused the flash crash, which caused not only the rand, but also the Turkish lira and Australian and New Zealand dollars to spike.

“A flood of orders to sell Australia’s dollar and the lira against the yen overwhelmed market makers on a day when Japan was shut and liquidity was thin,” Bloomberg reported.

“Individual investors cut their net lira long positions by 42,743 contracts, the most since August, according to data from the Tokyo Financial Exchange. The contracts were worth 427-million lira ($80.1m), though it is unclear whether the sales sparked the lira’s decline of as much as 9.2% against the yen, or happened after the wild gyrations triggered loss-covering.”

Asian markets were enjoying a relief rally on Monday morning, taking their cue from the US where the Nasdaq index rebounded 4.26% on Friday from Thursday’s 3% slump.

Tokyo’s Topix was up 3% ahead of the JSE’s opening on Monday morning. A 1.74% rise by Naspers’s dominant asset, Tencent, to HK$316 helped Hong Kong’s Hang Seng index rise 0.67%.

The top 40 index’s second-largest constituent, BHP, was up 3.2% to A$34.45 in Sydney ahead of the JSE’s opening on Monday morning.

The JSE managed to sidestep most of the turmoil in global markets caused by Apple’s 10% drop on Thursday. The local bourse rose 1% on Friday and 0.8% on Thursday.

The JSE is likely to follow Asian markets higher on Monday, although its gains may be dampened by the stronger rand.

US and Chinese officials are holding trade negotiations in Beijing this week.

“I think China wants to get it resolved. Their economy’s not doing well,” US President Donald Trump told reporters on Sunday. “I think that gives them a great incentive to negotiate.”

laingr@businesslive.co.za