Rand retreats as dollar demand returns
THE RAND weakened yesterday, retreating from a one-week high as a plan by the finance minister to pull the economy out of recession and positive mining data were overshadowed by a resurgence of dollar demand.
By 5pm, the rand had slipped 0.13 percent to R13.2667 to the dollar, having earlier hit a session best R13.1475 as technical and momentum indicators prompted investors to buy back into the currency and pocket short profits.
“The ZAR posted substantial gains earlier on. That was expected and indicators point to it being oversold. Gains were also supported by a softening of uncertainty, especially around the SARB’s independence,” said Halen Bothma of ETM Analytics.
The rand shed nearly 5 percent in the first two weeks of this month after a government watchdog recommended the Reserve Bank’s (SARB) policy be changed from inflation-targeting to socio-economic welfare.
The watchdog this week retracted the proposal following court challenges by the central bank governor, Finance Minister Malusi Gigaba and parliament, easing pressure on the currency.
But yesterday a dollar fightback wiped away some of the sheen off a 3.6 percent year-on-year jump in mining production and a Treasury plan that may see government selloff stakes in state firms to boost revenues.
Meanwhile, on the stock market, the benchmark JSE Top40 index was up 0.82 percent at 47 056.02 points, while the broader all share index added 0.75 percent to 53 300.96 points.
The banking index rose 1.54 percent with Capitec Bank Holdings the top performer, climbing 1.95 percent to R820.