JOHANNESBURG – South Africa’s rand weakened against the dollar in early trade on Thursday as fears of a fresh flare-up in tensions between the United States and China, and concerns about global growth weighed on investor appetite for riskier assets.
At 0651 GMT, the rand traded at 13.9300 per dollar, 0.58 percent weaker than its New York close of 13.8500 on Wednesday.
The currency is expected to trade in a range of 13.8000 to 14.0500 to the dollar on Thursday, NKC African Economics said in a note.
The daughter of Chinese tech giant Huawei’s founder has been arrested in Canada and is facing extradition to the United States, dealing a blow to hopes of any easing of Sino-U.S. trade tensions and rocking global stock markets.
“The reignited fear of trade tensions between the US and China is causing quite a bit of outflow from emerging markets as risk aversion is once again the investor’s modus operandi,” Peregrine Treasury Solutions said in a note.
The rand remains under pressure as the market awaits the Federal Reserve’s interest rate decision during its Dec. 18-19 meeting, as the central bank is widely expected to raise interest rates.
“The rand trading on the back foot as risk sells off. This morning the currency broke out of the 13.60 to 13.90 technical range, the current levels suggestive of further weakness,” Nedbank said in a note.
In fixed income, the yield on the benchmark government bond due in 2026 was up 5.5 basis points at 9.030 percent. (Reuters)