Rand continues to fight back

The rand continued to firm against the dollar on Tuesday after sliding to its worst levels in more than two years in the early hours of Monday morning, when it crashed past R15 to the US currency.

The rand plunged more than 8% along with the Turkish lira on Monday morning, reaching a low point of R15.41 to the dollar at about 2.30am, where it was last in June 2016.

In early trade Tuesday it regained nearly 3% against the dollar after investors began to show a bit more risk appetite.

The rand remains weak, however, trading at R14.16 to the dollar at noon.

Investors shifted back into buying mode but kept a nervous eye on Ankara after Monday’s bloodletting, which saw the lira hit record lows and equity markets go into free fall on concerns Turkey’s financial crisis could spread globally.

In European deals, the Turkish unit advanced to 6.57 to the dollar and 7.50 to the euro, which was well off the all-time record lows seen the previous day, after Turkey’s central bank vowed to boost liquidity.

Fears about Turkey-driven contagion in other economies, particularly emerging markets, sparked a global sell-off Monday — but there were healthy recoveries in Asian and European stocks on Tuesday.

 ‘Calm for time being’

The Frankfurt stock market gained 0.3 percent and Paris won 0.2 percent on upgraded second-quarter growth data, while London rose 0.1 percent in late morning deals on news of a falling UK unemployment rate.

“Turkey’s central bank managed to calm down the currency markets for the time being by committing to provide liquidity for the embattled Turkish lira and the currency’s two day free fall has finally slowed down,” said Fiona Cincotta, senior market analyst at traders City Index.

“The lira even managed to claw back some lost ground… allowing stock and commodity markets to recover.”

The Turkish currency, which had touched historic nadirs of 7.24 to the dollar and 8.12 to the euro on Monday, has now plunged by about a fifth against the greenback since last Friday.

Turkey’s crisis has been sparked by a series of issues, including a faltering economy — the central bank has defied market calls for rate hikes — and tensions with the United States, which has hit Ankara with sanctions over its detention of an American pastor.

There remain concerns about how the crisis will pan out, with Turkish President Recep Tayyip Erdogan in combative mood, accusing Washington of plotting against his country.

Eurozone stocks won additional support from news that the region’s economic expansion was better than previously thought in the second quarter.

Gross domestic product (GDP) growth hit 0.4 percent in the 19-country single currency bloc in the April to June period, and had not slowed to 0.3 percent as previously thought.

That also means that British growth no longer outpaced the eurozone’s in the second quarter.

 Chinese concern

Back in Asia, Shanghai and Hong Kong equities sank into the red on downbeat Chinese data, which also weighed on commodities.

“Chinese economic data including retail sales, industrial output and urban investment were all reported at a lower level than forecast in July,” added Cincotta.

“Lower Chinese numbers will be a cause of concern for many commodity markets because a slowdown in the Chinese economy will dampen demand for key commodities such as oil, metals and agricultural goods.”

Key figures around 12.45pm

Dollar/Turkish lira: DOWN at 6.57 lira from 6.88 lira late Monday

Euro/Turkish lira: DOWN at 7.50 lira from 7.87 lira

Euro/dollar: DOWN at $1.1385 from $1.1410

Pound/dollar: DOWN at $1.2769 from $1.2771

Dollar/yen: UP at 110.98 yen from 110.70 yen

London – FTSE 100: UP 0.1 percent at 7,648.85 points

Frankfurt – DAX 30: UP 0.3 percent at 12,393.11

Paris – CAC 40: UP 0.2 percent at 5,424.85

EURO STOXX 50: UP 0.4 percent at 3,421.98

Tokyo – Nikkei 225: UP 2.3 percent at 22,356.08 (close)

Hong Kong – Hang Seng: DOWN 0.7 percent at 27,752.93 (close)

Shanghai – Composite: DOWN 0.2 percent at 2,780.96 (close)

New York – Dow Jones: DOWN 0.5 percent at 25,187.70 (close)

Oil – Brent Crude: UP 66 cents at $73.27 per barrel

Oil – West Texas Intermediate: UP 61 cents at $67.81