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Rand reels from Trump turmoil

May 18 2017 13:00

Cape Town - The rand weakened more than 2.5% to trade over R13.50 to the dollar on Thursday, as pressure from turmoil in the White House caused havoc on world markets.

The dollar took strain from reports on President Donald Trump's ties to Russia and as his axing of FBI director James Comey came under scrutiny. This caused a risk off scenario for emerging market currencies, with the rand bearing the brunt, said dealers at TreasuryOne on Thursday.

By 12:55 the local unit was trading at R13.55 to the greenback after touching R13.58 earlier in the session.

TreasuryOne said the rand was leading the emerging currency weakness, with the rest of the emerging markets also taking strain as the risk off theme continued.

"Equity markets across the board are down and US futures are also pointing to a weaker opening now.

"The local bourse is in the green as all the rand hedge shares are pushing it currently. For now we will need to watch the US headlines carefully as we need to see how the political turmoil in the US unfolds," said TreasuryOne.

On Wednesday US stocks lost the most ground in eight months from the Trump debacle, with the Nasdaq closing down 2.605% and the Dow Jones 1.78%.

The VIX index (measure of market expectations of near-term volatility) has jumped by almost 50% overnight, said TreasuryOne.

TreasuryOne said gold has been a major benefactor of the the current turmoil, with the price jumping $20 since Wednesday.

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rand  |  markets  |  currencies

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