South Africa’s rand weakened yesterday amid jitters over upcoming elections and worries over a trade war between the United States and China, curbing last week’s demand for emerging-market currencies.
On Sunday, US President Donald Trump announced he would raise US tariffs on $200 billion worth of Chinese goods this week and target hundreds of billions more soon.
At 0600 GMT, the rand was down 0,94 percent at 14,4800 per dollar, sliding back from Friday’s close of 14,3450, after a mixed US jobs report and further indications the Federal Reserve would leave interest rates unchanged for most of 2019.
South Africans vote in parliamentary and provincial elections on Wednesday in what is seen as a referendum on the economy after nearly a decade of weak economic growth and massive corruption scandals.
A victory for the ruling African National Congress is almost certain, but the its majority is likely to shrink, unnerving investors looking for clarity on the policies of President Cyril Ramaphosa.
“If the ruling party gets a more than 60 percent vote then I believe the markets will take this as good news and we could get a test of the (rand) lows of last month around 13,75/13,80,” Warrick Butler, the chief trader at Standard Bank, said in a note.
Bonds also opened weaker, with the yield on the benchmark debt due in 2026 rising by 1,5 basis points to 8,575 percent.