eBusiness Weekly
JOHANNESBURG – South Africa’s rand weakened in early trade on Wednesday as investor optimism over the U.S.-Mexico trade deal was dimmed by concerns that the China-U.S. trade war will drag on for some time, hurting appetite for riskier assets.
At 0643 GMT, the rand traded at 14.3000 per dollar, 0.49 percent weaker than its close on Tuesday.
Risk appetite was boosted earlier this week after the United States and Mexico agreed to overhaul the North American Free Trade Agreement, putting pressure on Canada to agree to new terms on auto trade and dispute settlement rules to remain part of the pact.
The rand tumbled to two-year lows just shy of 16 earlier this month as a massive selloff of the Turkish lira spread to other emerging markets. The South African currency has since recovered but trading remains volatile.
“Even though concerns over possible contagion from Turkey have eased, there is simply far too much event risk at play,” Rand Merchant Bank analyst Nema Ramkhelawan-Bhana wrote in a note.
“The U.S. appears to have sidelined talks with China in favour of solidifying an accord with Mexico and Canada while Moody’s downgraded 20 of Turkey’s financial institutions, warning that the worst is still to come. Expect trade to be choppy today.”
Stocks were set to open lower at 0700 GMT, with the JSE securities exchange’s Top-40 futures index down 0.15 percent.
In fixed income, the yield on the benchmark government bond due in 2026 was up 3.5 basis points at 8.91 percent. – Reuters Africa
