South African rand extends losses on concerns over unity government obstacles
JOHANNESBURG, July 2 (Reuters) -The South African rand extended losses early on Tuesday on concerns over future challenges for the government of national unity (GNU) and after trading turbulently on Monday following the announcement of President Cyril Ramaphosa's cabinet.
At 0641 GMT, the rand traded at 18.44 against the dollar ZAR=D3, almost 0.5% weaker than its previous close. The dollar =USD was up around 0.09% against a basket of global currencies.
"The rand is trading weaker... this morning on what seems to be a 'buy the rumour, sell the fact' move," Andre Cilliers, currency strategist at TreasuryONE, said.
"The GNU remains a fragile agreement and investors are concerned over the many obstacles that need to be overcome going forward," Cilliers added.
Ramaphosa's African National Congress (ANC) lost its parliamentary majority for the first time in 30 years in the May 29 election and has formed a unity government with former rivals as a way to stay in power.
South African assets gave up some gains on Monday as the initial optimism shown by the markets waned a day after the new cabinet was formed. It included former opposition leader John Steenhuisen as agriculture minister.
The U.S. Federal Reserve's Jerome Powell will speak later on Tuesday and markets will listen for hints on the future interest rate path of the world's biggest economy.
The risk-sensitive rand often takes cues from global drivers like U.S. monetary policy in addition to local factors.
South Africa's benchmark 2030 government bond ZAR2030= was weaker in early deals, with the yield up 5 basis points to 10.005%.
Reporting by Tannur Anders; Editing by Andrew Heavens
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
