Rand weaker in risk-off trade as focus turns to Davos
The rand was weaker against major global currencies on Tuesday afternoon, performing worst among its emerging-market peers, amid a risk-off tone in global markets.
Warnings from the International Monetary Fund (IMF) over economic growth in 2019 prompted the decline in sentiment. The dollar was firmer due to investor interest in safe-haven assets, analysts said.
At 2pm, the rand was 0.61% weaker at R13.9088/$, 0.51% lower at R15.797/€ and 0.62% softer at R17.9346/£. The euro was flat at $1.1358.
The rand fared worst against the pound, despite Brexit uncertainty. Sterling found support from better-than-expected November job numbers. Unemployment fell to 4% in that month — a 44-year low — while the market had expected a rate of 4.1%.
UK prime minister Theresa May unveiled her back-up plan on Monday, which consists of pushing Brussels for further concessions on the Irish backstop issue.
Parties had agreed previously to avoid any hard border between Ireland and Northern Ireland, which could keep the UK in the EU’s custom union for a protracted period.
Investors still appear to be ruling out the possibility of a hard Brexit and believe the current dysfunction in UK politics will lead to at least an extension of the Brexit deadline, and possibly a new referendum, said FXTM chief market strategist Hussein Sayed.
Global focus is on the ongoing World Economic Forum meeting in Davos, while local consumer inflation data should get some attention on Wednesday.