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While short term risk aversion relating to the trade war narrative resumes, so has the short term weakening of emerging market currencies. The rand has however found a further domestic catalyst to underperform its peers from domestic political developments this week. The African National Congress (ANC), South Africa’s governing political party has resolved that it will look to change the Constitution in lieu of pursuing land expropriation without compensation. Whether the move is political pondering ahead of 2019 elections or not, the Rand’s reaction to the news has been one of investor concern.
The below graph shows the BRICS (Brazil, Russia, India, China, South Africa) currencies performance this week, to highlight the underperformance of the Rand.
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