Rand falls after record bonds selloff

SOUTH Africa’s rand fell against the dollar yesterday as the greenback rose broadly after trade-related worries eased amid a slight softening of the US administration’s approach to Chinese investment.

By yesterday afternoon the rand traded at 13.8100 per dollar, 1.96 percent weaker than its close on Tuesday.

US President Donald Trump said yesterday that he would use a strengthened security review process to deal with threats from Chinese investments to acquire US technologies, instead of imposing China-specific restrictions.

The yield on the benchmark government bond due in 2026 rose two basis points to 8.9 percent.

The yield had risen to 9.24 percent last week, its highest since December.

Rand Merchant Bank fixed income analyst Gordon Kerr said local bonds held up well, despite the risk-off environment.

“It remains to be seen if we can push lower from here. Investors don’t seem to be in a real rush to buy.

“But that will change if the dollar/rand manages to break through 13.10,” Kerr said. “Given how bid the dollar is at the moment, it does seem like the market still favours the top side.”

Data from the JSE showed foreign investors sold R34.7 billion worth of South African bonds between January and June, the highest sell-off on record.

On the bourse, stocks lifted after two consecutive negative sessions led by bourse heavyweight and rand hedge Naspers.

The benchmark Top 40 index was up 0.39 percent to 49 329 points, while the all share index was up by 0.21 percent to 55 369 points.

“The all-share was down 1.5 percent and now we see the market up… predominantly driven by Naspers,” said Grant Gilbert, portfolio manager at Nedbank Private Wealth.

Naspers, which owns about 30 percent of the Chinese technology firm Tencent, closed 2.57 percent higher at R3 177.99.

Rand-hedged stocks make the bulk of their revenue outside South Africa and tend to strengthen as the currency weakens.