South Africa's Rand Hit A Three-Month Low On Tuesday Over Uncertainties

Africa, Business, Politics

Investors have piled into trades seen as benefiting from the incoming U.S. administration, with markets anticipating Trump’s policies could mean higher economic growth in the short term but also potentially inflationary pressures.

South Africa’s rand hit a three-month low on Tuesday, hurt by a stronger dollar and weaker gold prices, as markets grappled with what another Donald Trump presidency will mean for U.S. policy and trade relations.

At 1533 GMT, the rand traded at 18.1325 against the dollar, down more than 1% on its previous close, its weakest level since mid-August.

The risk-sensitive rand has been highly volatile since Trump’s U.S. election win last week and is on course for its third day of heavy losses.

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Investors have piled into trades seen as benefiting from the incoming U.S. administration, with markets anticipating Trump’s policies could mean higher economic growth in the short term but also potentially inflationary pressures.

Potential policy changes include tariffs and tax cuts.

ETM Analytics said in a research note that the rand “remains on the defensive while investors try to understand what (Trump’s win) means for the dollar and for currencies quoted against it”.

The rand reacted little to positive local job data on Tuesday showing the unemployment rate fell for the first time in a year in the third quarter.

The unemployment rate fell to 32.1% from 33.5% in the second quarter (ZAUNR=ECI), opens new tab.

Another local factor that had little impact was manufacturing output for September (ZAMAN=ECI), opens new tab, which fell 0.8% year-on-year.

On the Johannesburg stock market, the Top-40 index (JTOPI), opens new tab closed 0.7% down.

The benchmark 2030 government bond was little changed, the yield at 9.23%.