Rand weaker on profit taking, JSE gains

THE RAND weakened more than 1 percent yesterday as investors took profit from a recent rally that sent the currency to new three-year highs overnight when new President Cyril Ramaphosa changed the finance minister in a cabinet reshuffle.

At 5pm, the rand bid at R11.7194 to the dollar, 12.6 cents softer than at the same time on Monday, recovering slightly after hitting a session-low R11.73, with investor focus switching to the first US congressional testimony by new Federal Reserve chairman Jerome Powell later in the session.

Some analysts attributed the rand’s weakness to concerns over why Ramaphosa retained ministers who are Zuma allies.

The rand had rallied in the run-up to the reshuffle that saw Ramaphosa reappoint Nhlanhla Nene as finance minister, but failed to hold below R11.51, a key technical level that could unlock further gains.

The reshuffle saw Ramaphosa add new faces and remove some ministers allied to Jacob Zuma, further fuelling investor hopes of economic reform and a clamp down on the corruption that Zuma was accused of. Zuma has denied any wrongdoing.

“The rand’s treading a narrow range between 11.50 and 11.75 and the long term trend remains rand strengthening. It needs to take out the 11.40 level to gain further,” said strategist at IG Markets, Shaun Murison.

Nene said yesterday his predecessor’s budget last week might not prevent further credit ratings downgrades, with Moody’s due to make decision at the end of March.

The rand slide was in-line with other emerging currencies as the greenback bounced back, while demand for risk currencies was also cooled by higher US Treasury yields and the growing prospect of interest rate hikes by the Federal Reserve.

Meanwhile, stocks rose, with the JSE Top40 index up 0.33 percent at 52 033.51 points and the broader all share index up 0.27 percent at 59 027.22 points.

Banking shares, which are seen as a barometer of political and economic sentiment, out-performed the broader market, with the index, up 0.68 percent.

Africa’s biggest retailer Shoprite advanced 2.11 percent to R263.43 after saying it would expand to Kenya.