Policy uncertainty weighs on the rand
THE RAND weakened yesterday as investors fretted over policy uncertainties including the independence of the central bank, although traders eyeing short positions and betting on further weakness helped it claw back some ground.
By 5pm, the rand had weakened to R13.4173 against the dollar, off a session low of R13.5075, as inconclusive US Federal Reserve minutes kept the dollar near oneweek highs.
The dollar then turned weaker after softer-than-expected private jobs data, but overall sentiment toward local assets remained uneasy after the public protector’s office said yesterday it would oppose legal challenges to its recommendation to change the central bank’s mandate.
The rand hit a seven-week trough after the ANC failed to agree a clear plan to get the economy out of recession, with pledges to nationalise the central bank and expropriate land set to stoke fears further.
Bonds were weaker with the yield on the benchmark paper due in 2026 rising.
Meanwhile, stocks retreated along with markets in Europe and the US. The benchmark JSE Top40 index retreated 0.52 percent to 46 000.77 points, while the broader all share index dropped 0.38 percent to 52 285.08 points. Luxury goods maker
Richemont was down 2.27 percent to R107.55 as more than half of the JSE’s blue chip stocks lost ground.
“It’s a broad-based sell off, we’ve seen Europe lows and the Dow and the S&P down fairly sharply,” said NorthShore Capital fund manager, Mark Loubser.
The negative press about the uncertainty surrounding the ANC’s policy direction could also be weighing on stocks, he added.