Rand dips against dollar

THE RAND retreated more than 1% yesterday as global risk demand fell off with concerns about the trade row between the US and China lingering, while stocks gained slightly on the day.

At 5pm, the rand was 0.28% weaker at R14.4114 per dollar, slightly firmer than the session low of 14.4975.

The rand briefly traded below the R14 mark on Tuesday before giving back those gains, and has since tumbled alongside other emerging markets as investor optimism over the US-Mexico trade deal faded.

Traders said month-end rebalancing of portfolios, which often sees fund managers and traders buying dollars to match losses by the local currency, had added to selling pressure.

Washington and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (Nafta) trade deal. But the fact that US President Donald Trump’s planned tariffs of another $200 billion (R2.9 trillion) on Chinese goods could take effect late next month dashed market optimism.

Local jitters over the government’s land reform policy have also weighed on sentiment toward the rand.

The rand rallied briefly to 13.9525 earlier after Parliament withdrew an expropriation bill passed in 2016 that allowed the state to make compulsory purchases of land.

The thrust of the bill, which sought to make compulsory purchases of land to redress racial disparities in ownership, has been overtaken by a proposal by the ANC to change the Constitution to allow the expropriation of land without compensation.

“In view of next year’s elections this contentious topic is not going to have caused volatility in the rand for the last time,” said emerging market analyst at Germany-based Commerzbank Elisabeth Andreae in a note.

Bonds weakened, with the yield on the benchmark paper due in 2026 up 6.5 basis points to 8.94%.

On the JSE, the all-share index strengthened 0.21% to 60 165 points and the Top-40 index 0.27% to 54 031 points, in line with international markets continuing to benefit from subdued trade tensions.

Shares in Steinhoff rose sharply after its board said it will meet over the next two days to discuss asset sales to boost cash flow and pay down debt. Its stock closed 25% higher at R2.75. – Reuters