Rand firmer but tests R15/$ on trade war jitters
The local currency is stronger as investors await new developments in the escalating trade war between the US and China
The rand was firmer on Wednesday but flirted with the R15/$ level in the morning session as investors await developments in the US-China trade war.
In a rapid sell-off, the rand hit R14.99/$ — a level it has not reached in more than two months as US-China trade war jitters decreased the appetite for riskier assets. The trade war took another turn this week after the US labelled China as a currency manipulator after the yuan weakened to its worst level in 11 years.
“China had wanted tariffs to be removed as part of any deal, so by doing the opposite [US President Donald] Trump was effectively delivering a rebuke,” London-based economists at Schroders Keith Wade and Craig Botham said in a note.
“The problem now is that both sides could get into a position where they cannot back down without losing face. Consequently, the prospect of a deal has diminished and the risks of escalation have risen.”
At 9.55am, the rand had firmed 0.25% to R14.8887/$, 0.33% to R16.6667/€ and 0.29% to R18.1094/£. The euro had weakened 0.1% to $1.1192.
Gold had gained 0.76% to $1,485.58/oz and platinum 0.49% to $854.87. Brent crude had gained 0.51% to $58.90 a barrel.
The SA Chamber of Commerce and Industry (Sacci) is scheduled to release the business confidence index for July later in the day.