Rand gains as dollar slides, stocks lower

THE RAND extended its comeback yesterday, ignoring turbulence in parliament to trade below the psychological 14 mark to the dollar, as a sharp slide in the greenback encouraged some short buying before focus shifts to today’s US jobs data.

Stocks fell led by rand hedge shares that weakened on the back of a strengthening currency.

At 5pm, the rand was 0.5 percent firmer at R13.9988 to the dollar compared to close of R14.06 overnight in New York.

The rand touched a session best of R13.9075, driven initially by a dollar slide on reports US President Donald Trump would nominate a dovish candidate to head the Federal Reserve.

With no data releases on the local front, the currency’s gains further supported indication the overhaul of US tax code would falter due to lack of detail.

“The immediate reaction to the tax proposals wasn’t dollar positive. And the announcement that (Jerome) Powell is expected to be the next Fed chair also helped the rand,” said currency dealer at TreasuryOne, Andre Botha.

“For the next couple of days you might see the rand holding below 14.00 especially after tonight if we see Powell confirmed,” Botha said.

A walk-out of a parliamentary answer session by the main opposition, saying President Jacob Zuma refused to answer how much the state had spent on legal fees to fight corruption allegations against him, had little effect on currency.

Bonds were weaker, with the yield on the benchmark paper due in 2026 adding 2 basis points to 9.04 percent.

On the bourse, the benchmark JSE Top40 index fell 0.4 percent to 52 845.63 points while the all share index dropped 0.31 percent to 59 331.2 points.

Rand-hedged stocks declined on the back of gains in the rand.

The biggest fallers on the Top40 index included British American Tobacco, which dropped 0.85 percent to R906.04, Richemont down 1.49 percent to R127.76 and bourse heavy-weight Naspers, which weakened by 1.25 percent to end the session at R3 431.46.

Curbing further losses, retailer The Foschini Group climbed 2.81 percent to R142.70 on the back on better than expected half-year earnings forecast.