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JOHANNESBURG - The rand slipped yesterday as the dollar regained momentum with the trade war pendulum swinging against emerging markets after the US and Europe struck an agreement, prompting some profit-taking on the currency’s recent rally.

At 4.45pm, the rand was 1.01percent weaker at R13.24 to the dollar, compared to the previous session’s more than one month best of R13.10, a rally prompted by a bear squeeze as investors short the currency looked to cover positions.

By 5pm, the rand had firmed somewhat, bid at R13.2232 to the dollar, but flat compared to the same time on Wednesday.

“The rand weakened slightly on profit taking at the start of Thursday’s (yesterday’s) session after gains recorded in the previous few days,” said analysts at Continuum Economics.

“We think that the currency will continue to depreciate in the near term,” they added.

The dollar index was up 0.3percent, rising off a two-week trough.

Before yesterday’s dip, the rand gained for three consecutive sessions to its firmest since June14, buoyed by news of a $14.7billion (about R195bn) investment by China in South Africa as well as broad demand for EM currencies.

The rally, which makes the rand the second best-performing emerging markets unit month-to-date, took some traders by surprise, leading to some quick buying that pushed the rand past key resistance at R13.20.

“Back above (R)13.22 and you could see a quick scurry for offers to cover those short term short positions generated by yesterday’s (Wednesday’s) move,” said chief trader at Standard Bank, Warrick Butler.

Bonds were firmer, with yield on the benchmark paper due in 2026 down to 8.615percent.

On the bourse, shares rose in line with global markets which hit four-month high on EU-US trade breakthrough hopes.

The blue chip JSE Top40 index closed up 0.76percent at 50703.73 points, while the broader all share index advanced 0.63percent to 56743.25 points.

Embattled retailer Steinhoff rose 9percent after it said that lenders to its subsidiary Hemisphere agreed to hold off their debt claims. Its shares closed 1.63percent firmer to R2.49.