MARKETS RAND SOFTER ON ECONOMIC PLAN

THE RAND weakened yesterday, as market participants digested an economic recovery plan focusing on infrastructure investment and job creation unveiled by President Cyril Ramaphosa.

At 5pm, the rand bid at R16.68 to the dollar, 19 cents softer than at the same time on Wednesday.

Ramaphosa said South Africa would embark on a massive public works and job-creation drive in response to the coronavirus crisis to return the economy to growth.

“The lack of information on where the funding will come from means that we will have to wait for the MTBPS (medium term budget policy statement) to see how committed broader government is to Mr Ramaphosa’s vision,” Jacques Nel, an analyst at NKC African Economics said in a note.

Demand for the rand in recent months has been partly supported by the still high yield on offer on local assets despite the central bank cutting lending rates to a record low.

But analysts have warned that these “hot money” flows would dry up without implementation of a credible plan for economic growth.

On the bourse, stocks fell along with global markets, with the bluechip Top40 index down 1.05 percent to 50 503.89 points and the all share index closing 0.99 percent lower at 54 843.96 points.

Gold shares shed 1.74 percent after the bullion price weakened as hopes faded for a US fiscal stimulus package before the presidential election. AngloGold Ashanti lost 2.49 percent at R452.30 and Harmony Gold dropped 1.68 percent to R96.85.

Also among the decliners, bourse heavyweight Naspers weakened 1.53 percent to R3094.75.

Bonds firmed, with the yield on the benchmark government issue due in 2030 down 1.5 basis points to 9.415 percent. I Reuters