Rand at 13-year low as the dollar moves higher

SOUTH African stocks recovered on Friday as the rand sank to its weakest level in more than 13 years, boosting commodity stocks as investors bet they would benefit from the softer currency.

A weaker rand is beneficial for commodity companies because their exports, sold in dollars, are more affordable and they are expected to sell more of their products.

The rand fell to its weakest since December 2001 as data showed that US job growth accelerated in May, bolstering prospects for an interest rate hike from the Federal Reserve in September.

The currency’s downfall sent commodity stocks such as Kumba Iron Ore up 3.51% to R169.61 and Sasol up 3.26% to R433.10.

“As a result of the weaker rand, most of these commodity stocks have improved,” said Nick Kunze, a senior trader at Consilium Securities.

Although spot gold fell as much as 1.1% to its lowest since March 19, mining company AngloGold Ashanti was up 2.1% to R110.27, buoyed by the weaker currency.

The All Share index recovered 0.72% to 51 694.25 points, and the top 40 index was up 0.89% at 45 993.24 points.

Mr Price led the blue-chip decliners as it fell 1.36% to R238.37.

Trade was active, with 187 million shares changing hands — slightly above last year’s daily av- erage of 183 million.

Expectations of more Greek debt drama drove European stocks lower as German Bunds posted their worst weekly losses since the euro’s inception in 1999, while the sharp pick-up in US jobs growth led the dollar to a 13-year high against the yen.

Uncertainty over Greece weighed on sentiment in Europe, but the surprisingly strong US labour market report pared equity losses in Europe and lifted Treasury yields. Wall Street opened lower but cut its losses after two hours of trading.

Non-farm payrolls increased 280 000 last month, the largest gain since December, while payrolls for March and April were revised to show 32 000 more jobs were created than previously reported, the US Labor Department said.

MSCI’s all-country world stock index fell 0.78%, while the pan-European FTSEurofirst 300 index fell 0.79%, to 1 544.98.

On Wall Street, stocks hovered near break-even. The Dow Jones industrial average fell 0.04% to 17 898.74, the S&P 500 rose 0.03% to 2 096.42 and the Nasdaq Composite added 0.08% to 5 062.94.

The dollar rose more than 1% against the euro, yen and Swiss franc. The greenback hit 125.740 yen, while the euro turned sharply lower after rallying earlier this week.

Brent was up 28c at $62.31 a barrel. —