Rand weakens as more forecasts predict Trump victory

Markets fear that a Donald Trump win could cause global economic and trade turmoil.

South African rand. Picture: EWN

JOHANENSBURG – The rand has weakened along with other emerging market currencies as more and more forecasts predict a Donald Trump victory.

Markets fear that a Trump win could cause global economic and trade turmoil, after he threatened to rip up existing us trade agreements.

As at 6:50 am, the rand was down 4.25% against the dollar, at 13.74.

Global markets, which have favoured Clinton as a status quo candidate have also reacted negatively to the latest developments.

The currency was down about 5% against the pound and about 6 percent against the euro.

Meanwhile, the US dollar sank and stocks plummeted as mayhem came to world markets on Wednesday as investors faced the possibility of a shock win by Republican Donald Trump that could upend the global political order.

Every new TV network projection in the US presidential election showed the race to be far closer than anyone had thought, sending investors stampeding to safe-haven assets.

Sovereign bonds and gold shot higher while the Mexican peso went into near free-fall as AP gave Florida to Trump.

As of 0335 GMT, Trump was leading Democratic rival Hillary Clinton by 36 Electoral College votes, with a tally of 167-131.

It takes 270 to win.

US stock futures recoiled more than 4 percent, a loss reminiscent of the carnage that followed the British vote to leave the European Union in June.

Markets fear a Trump victory could cause global economic and trade turmoil, discouraging the Federal Reserve from raising interest rates in December as long expected.

Fed fund futures were even starting to toy with the idea of a cut in rates next year <0#FF:> and it was possible the Bank of Japan and European Central Bank might be forced to ease policy further.

South Korean authorities were thought to have intervened to steady their currency, and dealers were wondering if central banks globally would step in to calm nerves.

The scale of the scare was clear in the Mexican peso, which plunged more than 10 percent against the dollar in the biggest daily move in two decades.

“There’s a lot of panic in the market, it is definitely an outcome it was not expecting,” said Juan Carlos Alderete, a strategist at Banorte-IXE.

The peso has become a touchstone for sentiment on the election as Trump’s trade policies are seen as damaging to its export-heavy economy.

But the story was very different against the safe-haven yen, with the dollar shedding 3 percent to 102.02 yen. The euro gained 1.5 percent to $1.1190.

Asian stocks also skidded, with MSCI’s broadest index of Asia-Pacific stocks outside Japan down more than 3 percent, and the Nikkei sinking nearly 5 percent.

Additional information by Reuters

(Edited by Leeto M Khoza)