Rand drops to one-month low, bourse flat

THE RAND slipped to its weakest in more than a month yesterday as a broad sell-off of emerging markets triggered by an impending US Federal Reserve (Fed) meeting and fears of a global trade war added to worries about a ratings review this week.

Stocks were barely changed with Sun International and Tiger Brands weighing on gains.

At 5pm, the rand bid at R12.0484 to the dollar, 6.15 cents softer than at the same time on Friday, having fallen as far as R12.1075 earlier in the day when New York traders came online and kept up selling pressure on the currency.

The rand rallied following Cyril Ramaphosa’s election as leader of the ANC in December and state president in February.

Recent economic data has also pointed to a strong recovery in the continent’s most industrialised economy.

The currency’s rally has, however, stalled as investors anticipated the Fed would switch to a more hawkish stance under new chairman Jerome Powell. The Fed is widely expected to hike interest rates at its meeting tomorrow evening.

On the domestic front, Moody’s rating decision expected on Friday has also kept a lid on demand for the rand.

“This week will be a reminder that global factors play a bigger role in SA asset prices than local factors, more so because the political dividend is now all in the price,” said analysts at Rand Merchant Bank.

In fixed income, the yield on the government’s benchmark 2026 issue rose 3 basis points to 8.175 percent, the highest level since March 5.

On the bourse, the broad JSE all share index was little changed, closing down 0.02 percent to 58 088.42 points. The benchmark Top40 index was also barely changed, rising up 0.03 percent to 51 434.84 points.

Sun International, the hotel and casino group, fell 2.52 percent to R58 after reporting a 41 percent drop in full-year profits for the 2017 financial year.

Further losses came from Tiger Brands, which fell 1.54 percent to R350.55, after flagging a record monthly loss of up to R33 million from its meat processing unit amid the largest listeria outbreak.

Investec Limited declined 3.83 percent to close R96.19.