Rand, JSE falter as dollar rebounds

THE rand slid on Friday, capping another action-packed week that also witnessed a sharper sell-off on the JSE.

The domestic currency fell as much as 2% against the dollar on Friday to R15.11/$ as the dollar regained strength in the lead-up to the US Federal Reserve meeting on Wednesday to decide on interest rates.

“The dollar bounce has and will continue to dominate risk currency moves,” said Rand Merchant Bank analyst John Cairns in a note.

The revived interest in the dollar came despite the dominant view in the market that the Fed will not raise rates this month.

The resurgent dollar in some measure offset the rand gains, which were this week driven the by decision by Fitch to affirm South Africa’s foreign currency credit rating at investment grade.

With a perkier dollar, commodity prices were lower, which translated into weaker commodity shares on the local share market. The Resource 10 index led the broad weakness on the JSE, leaving the All Share index off 2% at 53 175.20 points on the week.

Gold shares bucked a weaker trend, thanks to a relatively higher gold price that benefited from the metal’s perceived safe-haven status.

Spot gold fared better relative to other industrial commodities such as platinum, which slipped back below $1 000 an ounce by Friday.

“The macro themes weighing on the market at present are the timeline for rising interest rates in the US, the state of global economic growth and the possible exit of the UK from the EU,” said IG SA market analyst Shaun Murison.

MTN Group was one of the standout performers in the Top 40 index after the telecoms group announced on Friday that it had reached a deal with the Nigerian authorities on a fine over its unregistered cellphone users in that country.

The share price spiked 13.18% to close at R140, recovering about R30-billion in market value.