WATCH: Rand rally eases as geopolitical risk rises
JOHANNESBURG - The rand ebbed as the risk rally ran out of steam, making way for a resurgence in US-Sino trade tensions according to NKC Research.
Markets reined in risk appetite amid uncertainty surrounding the US response to China’s proposed security law for Hong Kong. In turn, a haphazard approach to South Africa’s phased reopening dampened the tone, while administrators for national carrier SAA denied reports earlier this week that some routes will be opened by mid-June. Meanwhile, as the dollar softened this week, we reinforce our earlier call for a strong dollar through the year. In fact, the current conditions strengthen our belief in some key dollar drivers. Along with the current volatility and uncertainty around growth outlooks, the tenuous relationship between interest rate differentials and exchange rates over the past five years has made these traditional dollar predictors less valuable. Instead, the USD should benefit from its safe haven status in the current environment. At the close of local trade, the rand quoted 0.16 percent weaker at R17.45/$, after trading in range of R17.35/$ - R17.53/$.
South African bourse
The JSE All Share (-0.21 percent) ended in the red yesterday, dragged by losses in large gold (-3.12 percent) and technology (-2.44 percent) stocks. In the overall emerging market sphere, the MSCI Emerging Market Index (+0.08 percent) traded firmer.
Brent crude oil
The Brent oil price traded sharply lower yesterday, after US President Donald Trump threatened a strong response to China’s security stance in Hong Kong. At the close of local trade, benchmark Brent crude futures quoted 4.29 percent weaker at $34.34pb. Crude prices extended losses during Asian trade this morning.
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