JOHANNESBURG (Reuters) -The South African rand retreated on Tuesday after the country’s central bank warned in a biannual review that the scope for monetary policy easing had narrowed because of global economic uncertainty.
At 1521 GMT the rand traded at 19.0175 against the U.S. dollar, about 0.6% weaker on the day.
The rand fell to a record low last Wednesday on risk aversion over U.S. President Donald Trump’s trade policies and concerns that South Africa’s national unity government could split.
The South African Reserve Bank (SARB) said that a global trade war poses a serious threat to economic activity, with spillovers expected for South Africa.
However, the local currency has recovered somewhat this week, helped by bets that the country’s coalition government will remain intact despite disagreements over the budget and a Sunday news report that the biggest political party, the African National Congress, could back down on a plan to raise value-added tax, the budget’s most contentious element.
On the stock market, the Top-40 index closed about 1% higher.
South Africa’s benchmark 2030 government bond was marginally weaker, with the yield up 0.5 basis points at 9.22%.
(Reporting by Tannur Anders and Bhargav AcharyaEditing by Alexander Winning, Ros Russell and David Goodman)
