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Rand steady with elections bets balanced

The rand inched upward early on Tuesday, bouncing back from the previous session’s losses as investors betting on President Cyril Ramaphosa securing a big enough election majority to push through reforms locked in positions.

Picture: EWN

JOHANNESBURG - The rand inched upward early on Tuesday, bouncing back from the previous session’s losses as investors betting on President Cyril Ramaphosa securing a big enough election majority to push through reforms locked in positions.

At 0650 GMT, the rand was 0.1% firmer at R14.4550 after sliding to a session low R14.5325 on Monday, weighed down by resurfacing trade tensions between the United States and China after President Donald Trump threatened $200 billion worth of tariffs on Chinese goods.

The resulting slump in risk demand dragged emerging currencies lower. The rand was down 1% at one stage before relief trickled in as investors sanguine on the outcome of Wednesday’s national election helped the currency inch towards the R14.50 support mark.

While a victory for the ruling African National Congress is almost certain, its majority is likely to shrink, constraining Ramaphosa’s reform and keep the economy on slow burn.

“Let’s not be fooled by the rand’s apparent resilience,” Merchant Bank rand analyst Nema Ramkhelawan-Bhana said.

“Volatility measures convey the market’s doubts with the 25 delta risk reversal jumping to a one-month high, showing an inclination towards the hedging of rand weakness rather than strength after the elections.”

Bonds also edged firmer, with the yield on he benchmark government paper due in 2026 down 1.5 basis points to 8.565%.

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