The rand was weaker on Tuesday, while the JSE firmed amid mixed global peers as investors digested US president-elect Donald Trump’s plans to increase tariffs.
Trump announced on his social media platform, Truth Social, that he intended to raise tariffs by an additional 10% on all Chinese goods entering the US.
The announcement followed Trump’s previous statement that he would impose tariffs of 25% on all products from Mexico and Canada through an executive order on January 20. That decision would effectively end the regional free-trade agreement.
Trump cited concerns about illegal immigration and the illicit drug trade as justification for the tariffs.
Wichard Cilliers, director and head of market risk at TreasuryONE, said the dollar was on the front foot as investors remain cautious about the proposed trade measures.
“The trade measures stoked fears of a renewed global trade war, potentially affecting global growth and trade balances,” said Cilliers.
After attempting to break the R18 level on Monday, the rand traded within a volatile range, hitting the intraday worst of R18.22/$ and intraday best of R18.04/$.
“With global sentiment shifting to a risk-off tone, emerging markets are expected to face continued pressure in the coming sessions,” said Cilliers. “The uncertainty surrounding trade policies and potential ripple effects on global trade weigh heavily on the rand and other risk-sensitive currencies.”
At 6.21pm, the rand had weakened 0.92% to R18.2102/$, 0.59% to R19.0466/€ and 0.88% to R22.8471/£. The euro was 0.25% weaker at $1.0467.
Cilliers added that rising geopolitical tensions and the potential for inflationary effects from Trump’s policies might delay Federal Reserve rate cuts, supporting the dollar and challenging emerging market currencies such as the rand.
Meanwhile, the nomination of hedge fund manager Scott Bessent as treasury secretary tempered investors’ nerves, as his measured approach is seen as prioritising market stability.
This week, investors will be focused on upcoming federal open market committee meeting minutes, personal consumption expenditure inflation data and GDP growth estimates for fresh insights into the Fed’s interest rate decisions.
The JSE all share gained 0.62% to 85,397 points and the top 40 0.62%. Food producers added 1.16%, industrials 0.86%, banks 0.79%, financials 0.61%, precious metals 0.6%, retailers 0.36% and resources 0.17%.
Industrial metals lost 0.37%.
At 6.40pm, the Dow Jones industrial average was 0.25% weaker at 44,622 points.
In the commodities markets, gold gained 0.17% to $2,629/oz while platinum lost 0.42% to $934.23/oz. Brent crude was 0.39% firmer at $72.79 a barrel.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.