Picture: 123RF/ALLAN SWART
Picture: 123RF/ALLAN SWART

The rand remained weaker against major global currencies on Wednesday afternoon, with growing global and domestic risks pushing it to a seven-month low against the dollar in intraday trade. 

Concern about the prolonged US-China trade war continues to dominate sentiment in global markets as there seems to be no end in sight. The tariff war has significantly weighed on emerging-market currencies, including the volatile rand.

Institute of Race Relations chief economist Ian Cruickshanks said: “If the trade war continues, there will be less overall global economic activity and reduced demand for the production of base commodities. [SA is an exporter] of these commodities to China. If we export less, we can afford to buy less, raising the threat of a current account trade deficit, which would add pressure to the already depreciating rand.”

At 2.45pm, the rand had pared some the day’s losses and was 0.24% weaker at R14.7638/$. It earlier fell to R14.8935, a seven-month low. It had also lost 0.17% to R16.4667/€ and 0.22% to R18.6764/£. The euro was flat at $1.1153.

Gold rose 0.33% to $1,283.62/oz, while platinum fell 0.84% to $792.59. Brent crude was down 2.38% to $68.43 a barrel. 

The benchmark R186 government bond had weakened, with its yield rising four basis points to 8.46%. Bond yields move inversely to bond prices.

Local political developments have fuelled nervousness in the markets, as President Cyril Ramaphosa is expected to appoint his cabinet this week. The rand began its latest fall — to R14.60/$ on Tuesday — after ANC deputy president David Mabuza was sworn in as an MP, adding to speculation about the composition of the new cabinet.  

“From a market perspective, they want to see an economy that is going to grow strongly and a cabinet that is going to push a structural-reform agenda. Something that shows that the country is going to become more business, investment, jobs and growth friendly. The concern around cabinet are that it could be another compromised cabinet and that would not be good from a market perspective,” Nedbank chief economist Dennis Dykes said.

mjoo@businesslive.co.za