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Rand slips as trade tensions weigh on risk demand

Having rallied to a two-week best of R14.1375 after the ruling African National Congress won a 57.5% majority that many investors see as key to economic reforms, the rand has slipped back towards the R14.40 mark.

South African rand.  Picture: Christa Eybers/EWN

JOHANNESBURG - The rand weakened early on Thursday, succumbing to risk-off sentiment sparked by global fears over the tariff war between the United States and China.

At 0645 GMT the rand was 0.26% weaker at R14.2600 per dollar compared with an overnight close of R14.2125 in New York.

Having rallied to a two-week best of R14.1375 after the ruling African National Congress won a 57.5% majority that many investors see as key to economic reforms, the rand has slipped back towards the R14.40 mark. Tepid economic data locally, with the unemployment rate rising and retail sales advancing only 0.2% in March, added pressure on the currency following US President Donald Trump’s weekend tweets escalating the standoff with China over trade terms.

The outlook for the rand and stocks is favourable, however, with low lending rates abroad and sliding inflation locally supporting carry trade by investors hunting for high-yield returns.

Bonds also weakened, with the benchmark 10-year bond’s yield adding 0.5 basis points to 8.425%.

In stocks, financial services group Investec said full-year earnings rose 3.6% despite challenges in its main markets, South Africa and Britain.

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