Reuters/Dado Ruvic/Illustration
Reuters/Dado Ruvic/Illustration

The rand was marginally weaker against major global currencies on Tuesday morning, holding on to overnight gains, with all eyes on possible volatility stemming from a crucial Brexit vote later.

UK Prime Minister Theresa May is widely expected to be defeated in a parliamentary vote on her draft Brexit plan. This is expected to generate significant uncertainty as a March deadline for the UK’s exit from the EU approaches.

At 9.30am the rand was 0.23% weaker at R13.7954 to the dollar, 0.33% against at R15.8375 to the euro and 0.42% at R17.7878 to the pound. The euro was flat at $1.148.

The rand was surprisingly resilient on Monday, despite gloomy Chinese economic data and generally risk-off trade on global markets. Analysts said the local currency continues to find some support, as it has done through the course of January, from the new dovish tone from the US Federal Reserve.

Progress is US-China trade talks is also seen as a factor that has supported global equities and emerging-market currencies.

Rand Merchant Bank analyst Nema Ramkhelawan-Bhana said: “The general trading pattern across asset classes demonstrates the market’s skittishness — a behaviour that will become more apparent as the year progresses, given the level of uncertainty over protectionism, populism, policy normalisation and global growth.”

“This implies greater levels of asset-price volatility over the medium term.”