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#RandReport: Rand falls on trade war fears, stocks up

At 1506 GMT, the rand was 0.63% weaker at R12.0575 per dollar compared to Thursday’s close.

Picture: EWN

JOHANNESBURG - South Africa’s rand weakened on Friday as resurgent US-China trade tensions and concerns about a slow recovery in the domestic economy soured investor sentiment, while stocks edged higher.

At 1506 GMT, the rand was 0.63% weaker at R12.0575 per dollar compared to Thursday’s close.

President Donald Trump on Thursday directed United States trade officials to identify tariffs on $100 billion more Chinese imports, upping the ante in an already high-stakes trade confrontation between the world’s two largest economies.

Beijing was swift to respond, warning on Friday it would fight back “at any cost” with fresh measures to safeguard its interests if needed.

The escalating tensions have hit investor demand for emerging market currencies.

The rand was also undermined by concerns that momentum in the economy has slowed since a sharp rebound in the wake of Cyril Ramaphosa’s election as leader of the ruling African National Congress in late December.

Data this week showed that business activity in South Africa slowed in March, while business confidence slipped.

Ramaphosa, who was elected South African president in February after the resignation of scandal-plagued Jacob Zuma, has promised to implement economic reforms to boost growth.

“Miracles do not happen - and things change slowly,” Commerzbank analysts wrote in a note. “The data signals that the recovery of the South African economy is likely to progress slowly and will require patience.”

Stocks rose as the market maintained a technical rally after straying into oversold territory earlier this week, according to momentum indicators tracked by chartists.

The benchmark Top-40 index added 0.09% to 49,140.59 while the wider All-share index closed 0.21% higher at 55,878.81.

In fixed income, the yield for the benchmark government bond was up 1.5 basis points to 8.055%, reflecting weaker bond prices.