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Rand races to 3-week high on easing trade war, Brexit tensions

In fixed income, the yield on the benchmark government bond due in 2026 dipped 2 basis points to 8.205%.

The rand powered to a 3-week best on Friday as emerging market currencies were boosted by thawing trade tensions between United States and China.

At 1545 GMT the rand was 1.91% firmer at R14.75, its best level since September 20, leading a rally of emerging market currencies sparked by US President Donald Trump’s comments that trade talks with Beijing were going well.

China and the US are in the second day of top-level negotiations aimed at rolling back tensions between the world’s two largest economies.

Risk demand globally was also soothed by the European Union and Britain agreeing on Friday to hold intense talks over the next few days to secure a deal for Britain’s departure from the bloc as the October 31 deadline looms.

“It’s all-round risk-on scenario, and the rand has broken through some key technical levels, so if it can close below the R14.70 level you might just see it hold on to these gains,” said Rand Merchant Bank trader Jan Sluis-Cremer.

“The talks yesterday between China and the US seem to have been received quite positively and that’s been good for everyone, except the Turkish lira of course,” said Sluis-Cremer.

The lira was the EM laggard, dragged down as Istanbul intensified air and artillery strikes in northeast Syria.

In fixed income, the yield on the benchmark government bond due in 2026 dipped 2 basis points to 8.205%.

On the stock market, the Top 40 index closed 0.76% higher at 49,404 points while the broader all-share was up 0.84% to 55,537 points.

Financial shares boomed, with boutique bank Investec up nearly 8%, while Nedbank and Absa climbed more than 3% on the day, boosted by the firmer currency.

On the downside, gold producers were hit by the improvement in global risk demand as investors ditched the metal typically considered a safe haven, along with the dollar.

Anglogold Ashanti was 6% lower at R296.14, while fellow bullion producers Sibanye Gold and Gold Fields were both down more than 4%, to R23.35 and R80.90 respectively. 

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