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Cape Town - The rand is set for a rough ride this week, with concerns over the China/Trump trade tariff dispute and US sanctions against certain Russian oligarchs putting pressure on the currencies of emerging markets, including South Africa.
The local currency opened at R12.09 to the dollar, and was trading 0.13% weaker at R12.11 to the greenback at 09:52.
"While the US/China [trade] impasse is still at the forefront of market movement, [Monday] saw a few other players entering the market," senior TreasuryONE currency dealer Andre Botha said in a morning statement. "None of the developments that happened yesterday was positive for emerging markets in general."
Botha said new US sanctions on certain Russian oligarchs brought to two the total number of BRICS countries in the US sightlines.
"When two of the most powerful emerging markets are under pressure, it can only bring uncertainty and subsequent emerging market weakness on board.
"In the short term, we see the rand sliding a little against the major currencies with R12.15 being a key resistance level. Should the rand break that level and also sustain it, we could see the rand heading to R12.40," he said.
Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, noted that Chinese President Xi Jinping somewhat soothed the market on Monday night after announcing that China would look to lower import tariffs for certain sectors, and would continue to create an environment favourable towards foreign investment and global trade.
This enabled the rand, which fell to a low of around R12.15 on Monday, to claw back some ground in overnight trade.
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