The rand was trading at R16.68 to the dollar in early trade, about 1% higher than its previous close. On Tuesday, it fell nearly 2%. On Wednesday, the rand regained some ground as China’s reaction to US House Speaker Nancy Pelosi’s visit to Taiwan was not as harsh as some in financial markets had feared.
Pelosi’s visit has heightened tensions between the US and China, which regards Taiwan as a breakaway province, prompting a sell-off in risk-sensitive currencies such as the rand on Tuesday. Hina expressed its rage with a surge in military activities, summoning the US ambassador and suspending several agricultural imports from Taiwan. However, demand for safe-haven assets fell on Wednesday, giving the rand some relief.
At 0730 GMT, the South African currency was trading at R16.68 to the dollar, up roughly 1% from its previous close. On Tuesday, it fell nearly 2%.
In a relatively light week for domestic economic statistics, a purchasing managers’ index survey revealed that South African private sector activity expanded for the third month in a row in July.
The benchmark 2030 bond issued by the South African government was marginally weaker in early trade, with the yield rising 2 basis points to 10.365 %.
Following weeks of speculation about her travel plans, a US military jet carrying Ms. Pelosi landed in Taipei late at night. Her decision to go on with the visit makes her the highest-ranking congressional official to visit the disputed island in a quarter-century, and it sets up a tense standoff with China, which American officials say could lead to more aggressive military posturing.
China, which is infuriated by any perceived challenge to its claims on self-ruled Taiwan, has repeatedly cautioned Ms. Pelosi not to visit. Soon after her arrival, Beijing revealed preparations for live-fire military drills, some of which would take place in areas overlapping the island’s territorial waters.
China’s People’s Liberation Army said in a separate statement that it will launch a series of joint naval and air exercises that would include “long-range live firing in the Taiwan Strait.” The exercises would temporarily block some commercial shipping lanes and Taiwanese ports for a period of time.
China has prohibited shipments from more than 100 Taiwanese food exporters, presumably in an effort to increase economic pressure. On Wednesday, the Chinese commerce ministry announced a halt on natural sand exports to Taiwan.