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#RandReport: Rand falls as trade war fears escalate

At 1525 GMT, the rand traded 0.61% lower at 11.8975 per dollar, its softest level since 21 March.

Picture: Supplied.

JOHANNESBURG - The rand slipped to its weakest in two weeks on Wednesday as heightened concerns over the impact of a trade war between China and the United States hit investor demand for emerging market currencies.
Stocks were also weaker on the day.

At 1525 GMT, the rand traded 0.61% lower at 11.8975 per dollar, its softest level since 21 March, from an overnight close of 11.8250 in New York.

Risk-off sentiment was sparked by Beijing’s announcement of a 25% levy on 106 US goods including soybeans, chemicals, cars, some types of aircraft and corn products.

The rand’s carry trade potential has also suffered after the local central bank eased lending rates last week just as the Federal Reserve embarks on a hiking cycle, causing the South African currency to lose out to the likes of the Turkish lira.

In fixed income, the yield for the benchmark government bond was up 5.5 basis points at 8.070%.

The top 40 share index was down 0.27% at 48,051 points, while the broader All-share index closed 0.48% lower at 54,602 points.

“We have seen a pullback in some of our banking and retail stocks but the real issue going forward is how the trade war situation pans out,” said Ferdi Heynke, portfolio manager at AfriFocus Securities.

Shares in retailer Steinhoff fell as much as 11% on the day, closing 10% lower at R3.

On Tuesday the firm assessed the value of a portfolio holding a major part of its property assets at $1.35 billion less than previously estimated.

“This is probably going to be dragged out for some time,” said Heyneke.