Rand slips to 3-month low, bourse higher

THE RAND came under severe pressure with the uptick in US capital market yields, losing about 1 percent to the dollar to R12.28 in early trade yesterday, its weakest level in more than three months.

Corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes, said yesterday that all emerging markets were coming under pressure, but the rand was really bearing the brunt.

“This pressure is expected to continue as the uptick in US capital market yields filters into the market,” Botes said.

At 5pm the domestic currency was bid 18 cents weaker than Friday’s same time bid at R12.27 to the greenback.

Against the pound, the rand was 16c softer at R17.12 and to the euro, the currency eased 15c to R15.

Senior currency dealer at TreasuryONE, Andre Botha, said a rise in oil prices to their highest level since 2014 had been the catalyst for the dollar.

He said the increase in oil prices had sent a bit of a shudder through the market as this increased the possibility that inflation could go higher.

“The US dollar reacted positively against this backdrop,” Botha said. “A weaker rand and stronger oil price do not bode well for South Africa’s inflation rate, and maybe the governor of the reserve bank was right in his cautious approach the cutting of interest rates as normalisation of markets could cause a bit of turbulence in the market.”

Meanwhile, stocks were higher yesterday with the blue chip Top40 index adding 0.22 percent to 50 877.98 points, while the broader all share index inched up 0.17 percent to 57 679.51 points.

Top gainers among bourse heavyweights were Kumba Iron Ore, which gained 4.19 percent to R291.72, followed by Old Mutual, which was 3.88 percent higher at R42.80.

MTN Group notched up 3.09 percent to R122.39, Bidcorp increased 2.52 percent to R279.88 and British American Tobacco closed 2.36 percent higher at R641.

Leading losses among the larger caps were South32, which sank 6.01 percent to R34.26, followed by RMB Holdings, which was 3.55 percent lower at R77.44.

Barclays Africa Group declined 3.33 percent to R174, FirstRand dropped 2.95 percent to R66.45 and Nedbank gave up 2.3 percent to end the day at R294.08.