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Rand scores off Trump election slump

Oct 10 2016 09:53
Jung Park and Harry Suhartono and Fin24

Seoul – The rand improved alongside other emerging market assets after US data last week indicated the labour market is settling into a pace that will support the world’s largest economy, and after Donald Trump and Hillary Clinton sparred in their second US presidential debate.  

The rand was trading 0.7% higher at R13.80/$ on Monday at 09:30.

READ: Rand set to break 5-year pattern of decline, claim analysts

“The rand managed to close around R13.87/$ on Sunday, but is now around R13.80/$ after the second debate between Trump and Clinton has just ended,” explained Umkhulu Consulting analyst Adam Phillips.

“It looks like the market is favouring Clinton, especially as Trump had a torrid time explaining recorded conversations from as far back as 2005. Unfortunately the second debate was very similar to the first, with (Trump and Clinton) attacking each other personally.”

At the presidential debate, Trump dismissed his vulgar comments captured in a 2005 video as nothing more than “locker room talk” and tried to deflect from the issue by attacking Clinton over her email use and past accusations of sexual misconduct against her husband.

Mexico’s peso climbed as much as 2% before reducing its advance to 1.5%, following a weekend of unprecedented crisis in Trump’s campaign.

"Investors will put more attention toward the US election than the likely Fed rate increase later this year,” Jeffrosenberg Tan, director for investment strategy at PT Sinarmas Sekuritas in Jakarta, said. “A Hillary Clinton presidency is viewed to be positive as it will provide less uncertainty and that’s good for emerging markets assets.”

The MSCI Emerging Markets Currency Index rose 0.1% at 08:40 after US Labour Department figures on Friday showed payrolls climbed by 156 000, following a 167 000 rise in August that was more than previously estimated.

South Korea’s won was poised for its biggest gain in almost two weeks. Thailand’s baht headed for the longest stretch of losses this year and prices for the nation’s debt declined after the royal palace said the king’s condition was unstable.

“Markets are off more heightened risk aversion,” said Vishnu Varathan, a senior economist at Mizuho Bank in Singapore. “I do not think there is real reason to go into the rally, because despite the non-farm payroll data, I do not think it has blown the prospect of a December hike out of the water either.”

While the improving US outlook supported Asian assets, the increasing probability of a Federal Reserve rate hike tempered demand. The market-based odds of a December rate increase climbed to 64% on Friday, from 61% at the start of last week.

The won gained 0.7%, set for its biggest gain since September 27, while Malaysia’s ringgit rose 0.3% to halt a three-day drop. Financial markets in Japan, Taiwan and Hong Kong were closed for holidays on Monday.

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