Domestic data boost rand, bonds, JSE higher

THE RAND strengthened and bonds rallied yesterday after better than expected inflation and retail data reactivated investor optimism that has bolstered the currency this year.

At 5pm, the rand was 0.42 percent firmer at R11.9353 against the dollar, a touch softer than the session-best R11.9275 but its strongest in a week, as investors cheered the March inflation figure sliding to its lowest in seven years on falling food prices.

The rand has strengthened by about 20 percent against the dollar since November, when Cyril Ramaphosa won the race to lead the ANC en route to his election as the country’s president in February.

The yield on the benchmark government bond due in 2026 fell 5.5 basis points to 8.025 percent, its lowest since April 5.

Lower inflation boosts demand for bonds because investors believe their investment will be worth more in the future.

Headline annual consumer inflation slowed to 3.8 percent in March from 4 percent in February, the lowest level since January 2011, Statistics South Africa said.

Month-on-month inflation slowed to 0.4 percent from 0.8 percent. Retail sales climbed 4.9 percent year-on year in February.

Ramaphosa said yesterday that the rand was almost back at its natural level.

Analysts said that while the lower consumer price index was good for the economy overall, the central bank was now less likely to raise interest rates.

Meanwhile, stocks ended higher yesterday, led by heavily weighted mining shares as commodity prices forged ahead.

The JSE all share index, the broadest measure of stock market performance, was up 1.56 percent at 57 713.29 points and the benchmark Top40 index rose 1.69 percent to 51 025.8 points.

Anglo American and BHP Billiton were among the top gainers, rising 5.18 percent to R304.53 and 3.75 percent to R257.81, respectively.

Metals such as nickel and aluminium were in demand on the London Metal Exchange on a combination of technical factors and supply concern.

On the downside, Rebosis slumped 7.85 percent to R7.51 after the property fund said its chief executive had quit and pushed back its half-year results.