Rand falls as Sino-US friction dents risk appetite

The rand fell on Wednesday following global weakness in emerging market currencies due to increasing Sino-US friction over China’s proposed security law for Hong Kong, retreating the two-month high seen a day before.

JOHANNESBURG - The rand fell on Wednesday following global weakness in emerging market currencies due to increasing Sino-US friction over China’s proposed security law for Hong Kong, retreating the two-month high seen a day before.

At 1520 GMT, the rand traded at R17.4400 per US dollar, 0.16% weaker than its previous close.

"Emerging markets are trading marginally on the back foot as tensions between China and the US remain elevated," Nedbank analysts said in a client note.

"Headlines suggest the implementation of sanctions by the US and the inevitable countermeasures that would follow."

US President Donald Trump on Tuesday said his administration was working on a strong response to China’s planned national security law for Hong Kong, which he said would be announced before the end of the week.

Shares on the Johannesburg Stock Exchange (JSE) on Wednesday mirrored the indecision of investors from other emerging markets over whether Sino-US tensions will hurt or a quicker economic recovery from the new coronavirus will help returns in future.

After rising on Tuesday, the benchmark FTSE/JSE all share index fell 0.21% to end the day at 50,496 points while the top 40 companies’ index slipped 0.42% to close at 46,601.

In fixed income, the yield on South Africa’s 10-year government bond was down 6 basis point to 8.985%.