South Africa’ rand weakened early on Friday as United States President Donald Trump’s overnight announcement that he had tested positive for COVID-19 dampened risk demand.
At 0645 GMT the rand ZAR=D3 was 0.6% weaker at 16.7000 per dollar from a close of 16.6000 overnight, halting a recovery that has seen the unit gain around 4% this week.
In a tweet, Trump said he and his wife Melania Trump had both tested positive and would begin quarantine immediately. set-off more volatility in currency markets already unnerved by the upcoming U.S. presidential elections in November and fears of a second wave of coronavirus infections in the United States as well as Europe.
“The rand is trading defensively along with other higher-risk assets in thinned liquidity conditions due to market holidays in China and India,” said market economists at ETM Analytics in a note.
“Ahead of the non-farm payrolls data later this afternoon, momentum may well stall, but given the over-riding news of Trump’s illness, market sentiment will remain a constraint to riskier currencies including the ZAR.”
Bonds also weakened, with the yield on the benchmark 2030 government issue ZAR2030= up 4.5 basis points to 9.45%.