South African rand rises; China’s response to Pelosi visit not as severe as feared

PUBLISHED: Wed, 03 Aug 2022 09:52:17 GMT
Alexander Winning
TAIPEI, TAIWAN – AUGUST 03: Speaker of the U.S. House Of Representatives Nancy Pelosi (D-CA), center, speaks after receiving the Order of Propitious Clouds with Special Grand Cordon, Taiwan’s highest civilian honour, from Taiwan’s President Tsai Ing-wen, right, at the president’s office on August 03, 2022 in Taipei, Taiwan. Pelosi arrived in Taiwan on Tuesday as part of a tour of Asia aimed at reassuring allies in the region, as China made it clear that her visit to Taiwan would be seen in a negative light. (Photo by Chien Chih-Hung/Office of The President via Getty Images)

JOHANNESBURG, Aug 3 (Reuters) – The South African rand regained some ground on Wednesday as China’s response to U.S. House Speaker Nancy Pelosi’s visit to Taiwan was not as severe as some in financial markets had feared.

Pelosi’s visit has caused an escalation in tensions between the United States and China, which views Taiwan as a breakaway province, triggering a sell-off in risk-sensitive currencies like the rand on Tuesday. Read full story

China demonstrated its anger with a burst of military activity, and by summoning the U.S. ambassador and halting several agricultural imports from Taiwan. But demand for safe-haven assets eased on Wednesday, providing some respite to the rand. Read full story

At 0730 GMT, the South African currency ZAR=D3 traded at 16.6800 to the dollar, nearly 1% stronger than its previous close. On Tuesday it lost almost 2%.

Also providing support to rand assets in a relatively light week for domestic economic data, a purchasing managers’ index survey showed South African private sector activity expanded for the third month in a row in July. Read full story

The South African government’s benchmark 2030 bond ZAR2030= was slightly weaker in early deals, with the yield up 2 basis points to 10.365%.

(Reporting by Alexander Winning; Editing by Mark Potter)

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