Rand firmer on investment drive, JSE flat
THE RAND gained to below the crucial 12 level against the dollar yesterday as rand bulls were encouraged by the announcement of an investment drive by President Cyril Ramaphosa and an improving economic outlook.
At 5pm, the rand bid at R11.9783 to the dollar, 10.25 cents stronger than at the same time on Monday, finding some breathing space along with other emerging currencies despite the greenback recouping some losses.
Like other emerging market currencies, the rand has been hit by risk-off sentiment sparked by fears of US-China trade war and developments in Syria, but yesterday also found support from data showing China’s economy grew slightly faster than expected at 6.8 percent in the first quarter.
“The rand performance has raised a few eyebrows. For a currency that usually is quite volatile it has been reasonably stable. This rally isn’t due to domestic factors alone,” said ETM Analytics economist, Halen Bothma.
“Ramaphosa’s investment initiative has encouraged some rand bulls. It’s improved the mood on the outlook side. It looks like the wheels on the political side are starting to turn and the rubber is hitting the road.”
On Monday, Ramaphosa appointed a team of business and finance experts to seek out $100 billion (about R1.2 trillion) in investment to boost the ailing economy, and yesterday the International Monetary Fund raised its 2018 growth forecast for South Africa to 1.5 percent.
Bonds were flat, with the yield on the benchmark 2026 paper steady at 8.08 percent
Meanwhile, stocks were barely changed as the bullion sector weighed on the bourse.
The benchmark JSE Top40 index gained 0.11 percent to 50 176 points, while the all share index rose 0.16 percent to 56 826.74 points.
Bullion producer stocks fell 2.99 percent, weighed down by a strengthening rand and a lower by gold spot price.
“It’s a consolidated market, with gold shares under pressure from the currency play strengthening,” said FFO Securities portfolio manager, Wilmar Buys.
Biggest losers in gold were Sibanye, down 5.61 percent to R10.10, Harmony, which lost 4.29 percent to R23.64, AngloGold Ashanti, which retreated 3.44 percent to R107.81, Pan African Resources, 1.64 percent lower at R1.20 and Gold Fields, which fell 0.93 percent to R47.