The rand weakened on Monday, while the JSE firmed as investors looked ahead to the final month of trading for the year.
The local currency was trading in a tight range as many market participants sat on the sidelines after Thursday’s US holiday, said RMB head of forex execution Matete Thulare.
In November, market sentiment was largely influenced by US president-elect Donald Trump’s victory. The rand, with other emerging-market currencies, declined amid concerns about the “Trump trade”.
Investors were concerned a Trump presidency could reignite his “America First” policies. These policies have historically led to increased trade tension and volatility in emerging markets.
Trump’s expected policies about fiscal spending and trade tariffs could fuel inflation, complicating the US Federal Reserve’s efforts to curb it.
Many analysts fear for SA’s export dynamics, which could dampen investor sentiment. There is concern about reduced foreign investment and higher import costs under Trump’s presidency.
At the weekend, Trump announced that he would impose “100% tariffs” on imports from Brics countries, effectively blocking them from US trading, if they proceeded with plans to introduce their own currency and move away from the dollar.
“Currencies were weaker across the board as the greenback rallied post Trump’s latest threat to impose trade tariffs against the Brics nations,” said Thulare.
“For the rand, current ranges continue. We expect R18.05-R18.25 trades for now with a break and close either side required for new direction,” he said.
At 5.41pm, the rand had weakened 0.71% to R18.2003/$, while it had firmed 0.39% to R19.0507/€ and 0.14% to R22.9689/£. The euro was 0.99% weaker at $1.047.
“Fears over trade wars, which characterised Trump’s first term on retaliations over US-driven protectionist measures, have resurfaced. US dollar strength has also added to the rand’s weakness over the second quarter,” said Investec chief economist Annabel Bishop.
“As January 20 approaches next year, the date the US president-elect takes over as president, markets are likely to continue to be affected by Trump’s statements on various issues, and in turn the rand by the dollar exchange rate,” added Bishop.
Globally, investors are looking out for highly anticipated US labour market reports later this week.
Additionally, market participants will be monitoring speeches by US Federal Reserve officials, including governor Christopher Waller and New York Fed president John Williams.
The JSE all share gained 1.44% to 85,731 points, with major indices firmer, while the top 40 added 1.61%.
At 5.50pm, the Dow Jones industrial average was 0.26% weaker at 44,794 points, while markets were mixed in Europe.
In the commodities markets, gold lost 0.33% to $2,641.58/oz and platinum 0.49% to $937.97/oz. Brent crude was little changed at $72.06 a barrel.
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