Rand volatility picks up amid uncertainty in US-China trade talks

The rand was mixed against major currencies on Monday afternoon, as investors waited for new catalysts from either the US-China trade talks or the local general elections.

The rand lost ground at the weekend following US President Donald Trump's threat to impose more tariffs on China.

"With developments at home and external drivers in the form of renewed US-China trade tension seen pulling and tugging at the rand, investors should fasten their seat belts and prepare for a potentially volatile trading week ahead," FXTM analyst Lukman Otunuga said.

At 2.10pm the rand was flat at R14.5162/$ after ending Friday at R14.35. It was 0.32% weaker at R16.2599/€, but 0.27% firmer at R19.0177/£. The euro was 0.19% firmer at $1.12.

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Trump tweeted on Sunday that the US would impose new tariffs on China for $325bn worth of goods, calling into question whether a US-China trade deal would be reached soon, as the market had expected. The threat comes as Chinese delegates plan to travel to Washington this week in the hope of sealing a deal. Chinese officials have confirmed that the talks are expected to take place, although there are signs that there may be a delay, Bloomberg reported.

Asian markets kicked off Monday on a bad note with the Shanghai Composite down 5.68% and the Hong Kong Hang Seng down almost 3%.

Volatility is likely to continue this week as South Africans head to the polls on Wednesday. According some analysts, a decisive victory by the ANC could boost investor sentiment, although the market would like to see concrete progress in terms of pro-growth policy reforms.

The rand has overtaken the Turkish lira as the most volatile emerging-market currency over one week, Bloomberg data shows.

- BusinessLIVE