South Africa’s rand weakens on risk aversion

Mixed denomination South African rand notes and coins are seen in this arranged photograph in London, U.K., on Wednesday, Oct. 31, 2012. South Africa's rand gained and bond yields rose after Reserve Bank Governor Gill Marcus said investors shouldn't assume the central bank will automatically cut rates to boost growth. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

JOHANNESBURG (Reuters) – South Africa’s rand weakened against the dollar in early trade on Thursday as fears of a fresh flare-up in tensions between the United States and China, and concerns about global growth weighed on investor appetite for riskier assets.

At 0651 GMT, the rand traded at 13.9300 per dollar, 0.58 percent weaker than its New York close of 13.8500 on Wednesday.

The currency is expected to trade in a range of 13.8000 to 14.0500 to the dollar on Thursday, NKC African Economics said in a note.

The daughter of Chinese tech giant Huawei’s founder has been arrested in Canada and is facing extradition to the United States, dealing a blow to hopes of any easing of Sino-U.S. trade tensions and rocking global stock markets.

“The reignited fear of trade tensions between the US and China is causing quite a bit of outflow from emerging markets as risk aversion is once again the investor’s modus operandi,” Peregrine Treasury Solutions said in a note.

The rand remains under pressure as the market awaits the Federal Reserve’s interest rate decision during its Dec. 18-19 meeting, as the central bank is widely expected to raise interest rates.

“The rand trading on the back foot as risk sells off. This morning the currency broke out of the 13.60 to 13.90 technical range, the current levels suggestive of further weakness,” Nedbank said in a note.

In fixed income, the yield on the benchmark government bond due in 2026 was up 5.5 basis points at 9.030 percent.

Reporting by Nomvelo Chalumbira; Editing by Subhranshu Sahu

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.


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