Rand firms a little as US and China move to placate markets

The rand was slightly firmer against major global currencies on Monday afternoon, although gains remained fragile, as investors considered the latest moves by the US and China to ease concerns over their escalating trade war.

Chinese officials have said they wanted “peaceful dialogue” with the US, while US officials have also said they were keen to resume talks.

“The potential is still there for US President Donald Trump to de-escalate the situation, but no-one can predict his behaviour. Last week, he was in a position for a win-win with the trade war and his re-election bid. [However,] the last few days have raised the possibility for a lose-lose outcome,” senior market analyst at Oanda Edward Moya said. 

While markets have been somewhat tranquillized, a lack of a firm recovery suggested high levels of caution in the market, Vanguard Markets managing partner Stephen Innes said in a note. “Good news or bad, investors continue to wear trade-war emotions on their sleeves.”

Developments on Friday had prompted a wave of sell-offs for risk assets, with China first saying it would impose retaliatory tariffs on US products from September 1.

The US also upped the quantum of tariffs it intends to levy on China, with US President Donald Trump also “ordering” US companies to begin seeking supply arrangements in alternative countries.

At 2pm on Monday the rand had gained 0.6% to R15.2666/$, 0.88% to R16.9711/€ and 0.79% to R18.6869/£. The euro was 0.32% weaker at $1.1116.

Gold was up 0.3% to $1,531.32/oz and platinum 0.1% to $861.51. Brent crude added 0.98% to $59.72 a barrel. 

News that the US and Japan were gearing up to sign a new trade deal in September also provided some support for markets, but the rand still looked vulnerable, TreasuryOne senior currency dealer Andre Botha said in a note.

gernetzkyk@businesslive.co.za