Rand gains on softer dollar, stocks volatile

THE RAND rose yesterday as the dollar fell after US President Donald Trump fired Secretary of State Rex Tillerson, while stocks weakened.

At 5pm, the rand bid at R11.7896 to the dollar, 3.02 cents firmer than at the same time on Monday.

Trump said on Twitter he was replacing Tillerson with Mike Pompeo, the director of the Central Intelligence Agency, and that Gina Haspel would take over from Pompeo.

The dollar was also held down by news of slowing US inflation, suggesting that the Federal Reserve remained on track to raise interest rates at a gradual pace.

The rand barely reacted to local data showing manufacturing output rose 2.5 percent in January, supporting market views that the domestic economy retained momentum at the start of the year.

The currency has largely stayed at elevated levels in recent months, buoyed by expectations of faster economic growth under the new political leadership.

“Hopes for a political change have been spurring the rand higher since November. However, the air should be getting thinner for further surges of the rand as the new government will have to ‘deliver’ now,” Commerzbank analysts wrote in a note.

“We expect a moderate rand depreciation trend in the coming months.”

In fixed income, the yield for the benchmark government bond due in 2026 rose 3 basis points to 8.095 percent, reflecting weaker bond prices.

In the equities market, stocks were a little volatile on the day, often changing from red to black and red again as they tried to find a fresh catalysts.

The JSE all share index dropped 0.19 percent to 59 084.51 points, while the Top40 index edged down 0.13 percent to 52 371.5 points.

Crisis-hit retailer Steinhoff closed down 3.41 percent to R4.25 after it said it had sold its 17 percent stake in KAP Industrial for R3.66 billion, another step in its efforts to shore up its finances and pay down debt.

KAP shares fell as much as 4 percent before recovering to close slightly up 0.47 percent to R8.54.

“The market was thinking that they would sell their whole stake. Maybe the market takes it as a positive,” said Cratos Capital trader, Greg Davies.

Still reeling from a move by Trump to impose tariffs on US metal imports, ArcelorMittal retreated 9.47 percent to R2.58.