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Rand slips as US-China trade row intensifies

Markets are in ‘a tentative risk-off mood’.
US-China tensions and upcoming MPC meeting weigh on the rand. Image: Waldo Swiegers, Bloomberg

South Africa’s rand weakened on Wednesday, reflecting gains by the dollar, while stocks tread water as worsening US-China relations fuelled demand, weakening demand for riskier assets and weighing on world markets.

At 1447 GMT the rand was 0.27% weaker at R14.82 per dollar.

Markets were in “a tentative risk-off mood as overnight developments cast a shadow over relations between China and the US,” said Andre Botha, a senior dealer at TreasuryONE.

The US Senate on Tuesday approved bills aimed at protecting human rights in Hong Kong, drawing a sharp rebuke from China and casting doubt on a thaw in tensions between the two superpowers.

Local focus now turns to the South African Reserve Bank interest rates decision on Thursday. The bank is expected to leave rates on hold at 6.5%, even though Wednesday’s data showed South African consumer inflation dropped in October to its lowest in eight years, increasing the chances of a rate cut.

On the stock market, the Top-40 index dipped 0.17% to 50 972 points and broader all-share was 0.36% lower at 57 168 points.

“Stories around this trade deal are still up in the air. It’s uncertainty which the markets don’t like,” said Independent Securities trader Ryan Woods.

Among the stocks that fell, FirstRand closed down 1.53% to R67.50 after falling more than 4% early Wednesday after its top investor, RMB Holdings (RMH), announced plans to distribute its roughly R130 billion stake in the bank to its shareholders.

Curbing further losses, Lewis Group Ltd rose 12.27% to R34.22 after it reported a rise in half-year revenue, driven by strong sales growth in the first quarter.

Yields on benchmark bonds due in 2026 fell 5.5 basis points to 8.315%. 

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