South African Rand coins are seen in this photo illustration taken September 9, 2015. Picture: REUTERS / MIKE HUTCHINGS
South African Rand coins are seen in this photo illustration taken September 9, 2015. Picture: REUTERS / MIKE HUTCHINGS

Gloomy Chinese economic data weighed on investor sentiment on Monday morning, with the rand weakening past the R16/€ handle, and heading towards R14/$.

China’s exports showed an annual decline of 4.4% in December as opposed to the 3% growth the market had expected. This is yet another disappointing data release out of the world’s second-largest economy, with analysts blaming fallout from the US-China trade war.

At 9.28am the rand was 0.39% weaker at R13.944/$, 0.47% at R15.9872/€ and 0.19% at R17.8942/£. The euro was flat at $1.1465.

At the same time the benchmark R186 government note was bid at 8.84% from 8.76%.

Focus this week will be on the Brexit vote in the UK parliament on Tuesday, which could prompt wild swings in the pound.

Locally, the Reserve Bank is widely expected to keep rates on hold on Thursday, although the tone of the bank will be closely watched. The dovish tone struck by the US Federal Reserve in January has raised hope that interest rates in that country will not rise as fast as previously expected, something that should support the local currency and bonds.

Local politics is also increasingly featuring on traders’ radar screens, with the ANC birthday celebrations at the weekend raising some eyebrows. The ruling party is calling for financial institutions to be forced to support various socioeconomic efforts, although it said the financial health of these institutions should be considered.

“The launch of the ANC’s manifesto this past weekend marks the beginning of what is likely to be a gruelling pre-election campaign season, with many political parties vying for seats in parliament as they look to influence public discourse at a time of grave socioeconomic uncertainty,” said Rand Merchant Bank’s Nema Ramkhelawan-Bhana.

gernetzkyk@businesslive.co.za