Rand slips, gold miners weigh on JSE
THE RAND weakened yesterday as better-than-expected growth in the US wobbled emerging market currencies and as jitters set in ahead of ANC’s six-day policy conference starting today.
By 5pm, the rand had slipped 0.46 percent to R13 to the dollar, near its weakest level in one week, after US data showed that economy slowed less sharply in the first quarter than initially estimated.
The lure of improved growth in the US and the likelihood of higher interest rates there is set to erode carry trade demand for the rand with political and policy uncertainty the main risks to sentiment.
“The rand’s recent outperformance seems to be running out (of) steam and looks set to weaken further after the US GDP data,” said economist at ETM Analytics, Halen Bothma, adding that the breach of R13 mark would be significant for momentum.
“It seems the focus of the ANC’s conference won’t be so much policy as the race for leadership, and that could be negative for the currency,” Bothma said.
Meanwhile, stocks were down as gold mining shares buckled under a lower bullion price.
The benchmark JSE Top40 index dropped 0.64 percent to 45 211.74 points, while the all share index was down 0.47 percent to close at 51 355.97 points.
The local gold sector declined 3.26 percent as bullion prices dropped 0.39 percent on signs that central banks may scale back their ultra-loose monetary policy pushed bond yields higher.
“Despite the Euro being stronger than the dollar we have commodity prices coming under pressure,” said Cratos Capital stock broker Yusuf Mola.
Gold Fields retreated 4.91 percent to end at R43.54.