South Africa’s rand was steady in early trade on Monday, as investors waited for the U.S.-China talks due to start this week to see if the world’s two top economies can find a path to a trade deal. At 0625 GMT, the rand traded at 15.0500 per dollar, not far off its close of 15.0700 on Friday.
“Markets remain firmly at the mercy of headlines. From the U.S., we have talks of an impeachment; in the UK, Brexit and its effects remain; and global attention is now on the scheduled resumption of trade talks between China and the U.S.,” Nedbank analysts wrote in a note. Locally, the woeful state of state-owned enterprises and the government’s continued bailout of these firms remain a drain on the economy, they said. “With these factors weighing on the local unit, it has thus far, unsurprisingly, failed to make any headway on a move sub-15.0000,” they added.
South Africa relies on exports to China and the United States for a bulk of its revenue, and the deepening spat between the two sides risks denting the country’s already dim economic prospects. The United States and China have slapped tariffs on each other’s goods as part of a long-running dispute over Beijing’s trading practices, which Washington says are unfair. The next round of trade negotiations are slated to be held in Washington on Oct. 10-11. In fixed income, the yield on the benchmark government due in 2026 was up by 0.5 basis point to 8.19%.