Rand cheers Cyril’s tough talk on graft

THE RAND scaled a two-and-ahalf year high against a broadly fragile dollar yesterday, climbing more than 1 percent after the central bank held interest rates steady and the new head of the ANC ramped up his tough talk on graft.

At 5pm, the rand bid at R12.1986 to the dollar, 6.80c firmer than at the same time on Wednesday, after earlier hitting R12.1525, according Thomson Reuters’ data, its strongest level since mid-2015.

The SA Reserve Bank kept its benchmark repo rate unchanged at 6.75 percent yesterday, in line with expectations, saying that risks to inflation were still on the upside despite the recent strengthening of the rand.

On the political front, Deputy President Cyril Ramaphosa yesterday called on prosecutors to act urgently in pursuit of a firm owned by friends of President Jacob Zuma, as pressure mounted on the latter to step down.

Ramaphosa succeeded Zuma as head of the ANC last month, making him likely to become the next president in 2019 – or earlier, if Zuma resigns.

This would be welcomed by markets and investors as Zuma’s rule has been marred by shoddy governance and widespread allegations of corruption, which he has denied.

Government bonds were little changed with the yield on benchmark 2026 instrument half a basis point higher to 8.48 percent.

Meanwhile, stocks were little changed with benchmark JSE Top40 index closing 0.11 percent higher at 54 010.49 points. Its 14day RSI, a momentum indicator tracked by analysts, shows it is near overbought levels, which could cap gains in coming days.

The broader all share index was little changed at 60 922.55 points.

Retailers extended a rally from Wednesday triggered by strong domestic retail data which has been taken as a sign of a better-than-expected economic recovery.

Woolworths was the biggest advancer of the session, leaping 9.23 percent to R66.63, Steinhoff jumped 5.02 percent to R6.91 and Shoprite was up 3.68 percent to close at R239.48.

On the global front, the first acceleration by China’s giant economy in seven years kept stocks near record highs yesterday, but added to growing pressure on bond markets as US Treasury yields reached a 10-month high.