Rand weaker on trade war, growth fears
THE RAND weakened on Friday as resurgent US-China trade tensions and concerns about a slow recovery in the domestic economy soured investor sentiment, while stocks edged higher.
At 5pm, the rand bid at R12.0569 to the dollar, 7.63 cents softer than at the same time on Thursday.
President Donald Trump on Thursday directed US trade officials to identify tariffs on $100 billion (about R1.19 trillion) more Chinese imports, upping the ante in an already high-stakes trade confrontation between the world’s two largest economies.
Beijing was swift to respond, warning on Friday it would fight back “at any cost” with fresh measures to safeguard its interests if needed.
The escalating tensions have hit investor demand for emerging market currencies.
The rand was also undermined by concerns that momentum in the economy has slowed since a sharp rebound in the wake of Cyril Ramaphosa’s election as leader of the ANC in December.
Data last week showed that business activity in the country slowed in March, while business confidence slipped.
Ramaphosa, who was elected South African president in February after the resignation of scandal-plagued Jacob Zuma, has promised to implement economic reforms to boost growth.
“Miracles do not happen – and things change slowly,” Commerzbank analysts wrote in a note. “The data signals that the recovery of the South African economy is likely to progress slowly and will require patience.”
In fixed income, the yield for the benchmark government bond was up 1.5 basis points to 8.055 percent, reflecting weaker bond prices.
Stocks rose as the market maintained a technical rally after straying into oversold territory earlier last week, according to momentum indicators tracked by chartists.
The benchmark JSE Top40 index added 0.09 percent to 49 140.59 points, while the wider all share index closed 0.21 percent higher at 55 878.81 points.
Among the top gainers, NEPI Rockcastle soared 9.34 percent to R131.99, Sappi Limted jumped 6.37 percent to R81.27, Gold Fields advanced 3.65 percent to R47.13, Sasol was 3.53 percent higher at R421.30 and Bid Corporation climbed 3.32 percent to R269.53.