JOHANNESBURG: South Africa's rand firmed against the US dollar on Tuesday, helped by a weaker greenback as optimism about easing trade tensions between the United States and China faded, while stocks fell due to profit-taking.
At 1535 GMT, the rand was 0.35pc firmer at 14.0900 per dollar, as the US currency slipped from two-week highs.
A trade truce between the United States and China on the sidelines of the G20 summit over the weekend had calmed fears and boosted the dollar, but negotiations are ongoing.
The tone changed after US President Donald Trump said any deal would need to be somewhat tilted in favour of the United States, arguing that China has long had a trade advantage.
The rand had gained strongly in the previous month along with other emerging assets as the greenback slumped over the likelihood of lower US lending rates.
"While the rand is likely to continue to gain from perceptions, and particularly the occurrence, of global monetary policy easing, the third quarter tends be a quarter in which financial markets often experience risk-off," said Annabel Bishop, chief economist at Investec.
"In particular, fears of slowing global economic growth have impacted markets, and could limit EM currencies gain in Q3.19," Bishop added in a note.
On the bourse, stocks weakened with the Top-40 index down 0.71pc to 52,093 points while the broader All-Share Index fell 0.65pc to 58,095 points.
Profit-taking and waning investor optimism over the trade talks saw local equities, alongside most emerging market peers, lose some of the gains they had made on Monday.
"There's been a little bit too much optimism backing already so we saw a bunch of profit-taking," said Thebe Stockbroking private client trader, Robert Cameron.
Fashion retailer Truworths fell 5.03pc to 68.85 rand after it said its British footwear chain Office has entered debt restructuring talks with its lenders amid tough trading conditions.
In fixed income, the yield on the benchmark 10-year government issue added 2.5 basis points to 8.15pc.