Rand firmer on better economic prospects

THE RAND inched firmer yesterday, holding its ground against the weaker dollar with higher gold prices and signs of improving economic growth luring back buyers.

Stocks were down as resource companies suffered as part of a global selloff.

At 5pm, the rand bid at R14.3871 to the dollar, 3.83c stronger than at the same time on Tuesday, marginally firmer that its close of R14.37 overnight in New York.

The rand climbed to a session best of R14.31, with bids spread almost evenly between R14.34 and R14.40, the former a recent technical resistance target that could open the door for further gains towards R14.20.

Traders said buying action would be concentrated at these levels as investors looked to find positions ahead of next Thursday’s local lending rates decision and credit rating announcements the day after.

All but two of the 28 economists surveyed over the past week by Reuters said rates would stay at 6.75 percent at the November 23 Reserve Bank meeting.

S&P Global Ratings and Moody’s are expected to announce their decision on November 24.

Bonds continued to firm, with the yield on the benchmark paper due in 2026 cutting 5.5 basis points to 9.41 percent.

Retail sales rose by 5.4 percent year-on-year in September, beating expectation of 4.5 percent expansion, according to Statistics South Africa.

“Despite the month-on-month falls in output and spending in September, it looks like the economy enjoyed reasonably strong growth over Q3 (third quarter) as a whole,” said senior emerging markets analyst at Capital Economics, William Jackson.

Stocks ended weaker, with the JSE Top40 index down 0.51 percent at 53 004.17 points and the wider all share index falling 0.56 percent to 59 185.21 points.

Gains on the gold index tracking higher global bullion prices were countered by losses in resources, banking and general retailers.

Packaging firm Nampak retreated 5.86 percent to R16.70 after it said in a trading statement earnings per share, a measure of profitability, was expected to fall nearly 90 percent in the period ended September 30.

Glencore slipped 2.2 percent to end the session at R65.43