Interest rates prospects weigh on rand

THE RAND weakened yesterday, weighed down by expectations of lower domestic interest rates and cautious trade ahead of US Federal Reserve chairperson Janet Yellen’s speech at a central bankers’ meeting.

At 5.13pm, the rand traded at R13.21 to the dollar, 0.44 percent weaker than its New York close on Wednesday.

South Africa’s consumer price inflation retreated to its lowest in nearly two years, data showed on Wednesday, boosting the chances of further interest rate cuts.

Traders said investors, anticipating lower interest rates, were starting to look elsewhere for higher yields.

There was also caution ahead of Yellen’s speech today at the Jackson Hole Economic Policy Summit in Wyoming. European Central Bank president Mario Draghi will also speak at the conference.

“The Fed’s Jackson Hole Economic Policy Symposium starts this evening (last night), but will only affect markets from tomorrow (today),” Rand Merchant Bank economist John Cairns said in a note.

Meanwhile, stocks hit a new record high, with Ascendis Health leading the gainers after flagging higher full-year earnings.

The benchmark JSE Top40 index rose 0.74 percent to 50 101.48 points, a record high, while the all share index ended 0.76 percent higher at 56 588.99 points, also a record high.

Leading the gainers, Ascendis Health soared 14.92 percent to a four-and-a-half week high of R20.95. The company said it expected its full-year headline earnings a share to rise up to 66 percent.

In fixed income, the yield for the benchmark government bond closed flat.