Jobs data helps rand to 15-month high against dollar

THE RAND raced to its firmest in more than 15 months against the dollar yesterday, helped by improved risk appetite and jobs data suggesting the economy was improving.

Stocks were weaker, with the JSE dragged lower by miner Kumba Iron Ore after the company said it was still not in a position to pay shareholders a dividend despite its earnings double.

The rand had gained 1.63% to 13.1225 a dollar, its strongest since October 23, 2015, according to Thomson Reuters data, after closing at 13.3400 overnight in New York. “It’s really a technical move and a continuation of recent momentum. There’s been pressure for a while on the dollar/rand to break lower and now it’s happened.

“Now we need to see a close at around 12.90 to confirm the move and maybe see the rand strengthen further,” said Jim Bryson, currency trader at Rand Merchant Bank. The rand kicked off local trade on the front foot as the dollar came under pressure after the resignation of US National Security Adviser Michael Flynn. It made further gains as the unemployment rate pulled back from its highest in 13 years.

Technical and momentum indicators point to the rand extending the rally after struggling to break short-term resistance of around 13.40 for the past two weeks, although it remains vulnerable to swings in global sentiment.

A Reuters poll of 39 strategists last week saw the rand weakening about 8% last year as the government struggles to keep public spending down, and as rates are expected to rise in the US. On the JSE, the Top 40 Index was down 1% to 45 471 points, while the wider All Share Index was 0.9% weaker at 52 473.

Statistics SA (StatsSA) yesterday said the unemployment rate decreased by 0.6 of a percentage point to 26.5% for the fourth quarter of 2016 as employment grew by 235 000 and the number of jobseekers declined by 92 000.

The agency, however, said the figure was still 2 percentage points higher when compared to the same period last year.

The results of the Quarterly Labour Force Survey for the fourth quarter of 2016 revealed that employment was driven mainly by the services industry, which grew by 73 000.

The transport and manufacturing industries followed, growing by 46 000 and 44 000 respectively.

All other industries reported employment growth quarter-to-quarter except mining and construction, which declined by 17 000 and 9 000 respectively.

StatsSA said the unemployment rate declined in four of the nine provinces, with North West registering the biggest decline of 4 percentage points.

The expanded unemployment rate, which includes those who wanted to work but did not look for work, decreased by 116 000, resulting in a decline of 0.7 of a percentage point in the expanded unemployment rate to 35.6%.

However, StatsSA said there were still 8.9 million people looking for work. – Reuters and ANA