JOHANNESBURG (Reuters) – South Africa’s rand retreated on Wednesday after the United States threatened to impose tariffs on another $200 billion worth of Chinese imports, cooling risk demand that had seen the currency rally to its best in three weeks.
A street money changer counts South African Rands in Harare, Zimbabwe, May 5, 2016. REUTERS/Philimon Bulawayo
At 0700 GMT the rand was 0.58 percent weaker at 13.4075 per dollar compared with the close of 13.3300 overnight in New York.
The surprise move by the United States reignited fears of a trade war between the world’s two biggest economies that risks derailing a global economic recovery.
Emerging currencies suffered across the board, with investors opting for safer bets after the first half of the week had seen sentiment slightly favour riskier assets.
As a result the dollar rose 0.1 percent in early trade against a basket of currencies.
Analysts said the rand would trade cautiously in a narrow range between 13.30 and 13.60.
Bonds were also weaker, with the yield on the benchmark bond due in 2026 up 3 basis points to 8.7 percent.
The Johannesburg Stock Exchange’s Top40 index opened down 1.35 percent at 51,094 points.
Reporting by Mfuneko Toyana, editing by Louise Heavens