SA rand stronger

A man holds new South African banknotes at the value of ten, twenty, fifty, one hundred and two hundred South African Rand depicting former South African president Nelson Mandela at The South African Reserve Bank (SARB) on July 13, 2018 in Pretoria, South Africa. The South African Reserve Bank in celebration of the centenary of Mandela's birth launched its first commemorative banknote series. The larger than normal notes, namely the R10, R20, R50, R100 and R200, depict Mandela's historical journey from his birthplace to his last days. / AFP PHOTO / Phill Magakoe

JOHANNESBURG. — South Africa’s rand started the week stronger after the United States and China agreed to restart their troubled trade talks, lifting the mood across emerging markets.

At 0625 GMT, the rand traded at 14,0500 versus the dollar, around 0,2 percent firmer than its previous close.

Government bonds were also stronger, as the yield on the benchmark 2026 bond fell 3,5 basis points to 8,06 percent.

After meeting Chinese President Xi Jinping in Japan on the sidelines of Group of 20 summit, US President Donald Trump said he would hold back on new tariffs and that China will buy more farm products.

China is South Africa’s top trading partner, and the rand is used by some investors as a proxy for emerging market risk, so the rand has tended to move on news on the US-China trade war. Warrick Butler at Standard Bank said in a note to clients that markets were expecting the South African Reserve Bank (SARB) to cut its main lending rate by 25 basis points at its monetary policy meeting this month.

“The likelihood of a SARB cut is high and the rhetoric could and should also be rather dovish,” Butler said. — Reuters.