Rand slips over fears of Trump’s ‘trade war’
The rand opened weaker on Thursday morning (8 March), following remarks made by American president Donald Trump and the spectre of a global trade war.
In addition to sparking fears in the EU, Trump’s planned steel tariffs have weighed heavily on on emerging market currencies, particularly commodity exporters such as South Africa, Reuters reports.
By 08h40 South African time, the rand had weakened 0.27% to R11.86/dollar, marking a second straight session of losses as fears of a sell-off slowed demand for one of the best performing currencies globally.
- Dollar/Rand: R11.86 (-0.27%)
- Pound/Rand: R16.47 (-0.10%)
- Euro/Rand: R14.70 (-0.11%)
These fears were stoked after the departure of top economic adviser to Trump, Gary Cohn, sparking worries that Trump will indeed move ahead with the new tariffs.
“The rand, however, remains a bull target with the fast recovering economy on the back of Cyril Ramaphosa’s appointment as state president, fuelling bets the currency will stretch gains if it breaks through technical resistance at R11.70 dollar,” Reuters said.
Revised rand levels
On Tuesday, Bloomberg reported that analysts were ‘scrambling‘ to revise their expectations for the rand for the remainder of 2018, on the back of ‘Ramaphosa fever’.
“As recently as December, the median prediction of analysts in Bloomberg surveys was for the rand to end 2018 at R14.50 per dollar. That’s come down to R12.30,” it said.
“Foreigners can’t seem to get enough of South African assets. Inflows into the country’s stocks and bonds are running at a combined daily average of R916 million ($78 million), compared with R216 million last year.
“That suggests investors are becoming more comfortable with the currency risk,” it said.
Read: Analysts ‘scramble’ to change their forecasts for the rand
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