Loading...

Rand remains vulnerable to trade wars

Jun 26 2018 09:58
Lameez Omarjee

The rand remains vulnerable to geopolitical developments, having lost ground on Monday as trade wars returned to the spotlight.

The local currency opened at R13.54/$ on Tuesday morning, after trading 0.79% weaker by Monday's close at R13.57/$, due to fresh US-Sino trade war threats, according to analysts from NKC Economics.

By 09:56 on Tuesday morning, the local currency was trading 0.28% weaker at R13.58 against the greenback.

"The South African currency weakened, in line with general emerging market weakness, following news that President Donald Trump plans to bar many Chinese companies from investing in US tech and to block additional technology exports to China."

NKC Economics expects the rand to trade within a range of R13.35/$ to R13.60/$.

"The market has started to become worried about the effect that a trade war will have on the global economy, and we have seen emerging market currencies under pressure due to this," said Andre Botha, senior currency dealer at TreasuryONE.

"The US dollar has also been on a slippery slope as US companies are starting to question the tariffs that are being imposed by President Trump and how they will still be profitable with the tariffs," Botha added.

"The rand will track most of the emerging markets today, and with risk-sentiment not in the emerging market's favour at the moment, we can expect the rand to be on the back foot today."

Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, also echoed views that emerging markets had taken a knock on the back of reports of the trade wars.

"Geopolitics will dominate the performance of the rand, so markets will keep a close eye on what the world leaders will be saying regarding trade," said Botes.

"The rand remains vulnerable and a range of R13.40 to R13.70 can be expected."

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

rand  |  markets  |  currencies
NEXT ON FIN24X

 
 
 
 

Company Snapshot

#SAVINGSMONTH

Five of SA's top financial brains, including SARB governor Lesetja Kganyago share their best savings habits.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Are you prepared for the latest round of Eskom’s load shedding??

Previous results · Suggest a vote

Loading...