RAND DROPS, JSE ADDS POINTS

THE RAND weakened yesterday as data showing contractions in mining and manufacturing in July pointed to a slow recovery in the domestic economy.

At 5.40pm the rand was 1.59 percent weaker at R16.88 to the dollar.

Statistics South Africa agency figures showed yesterday that mining output fell 9.1 percent in July while manufacturing was down 10.6 percent.

On the other hand, the central bank said that the current account balance swung to a deficit in the second quarter as the trade surplus more than halved due to the impact of the Covid-19 pandemic.

“South Africa’s weakening economic fundamentals have dragged down the rand,” Investec economist Annabel Bishop said in a research note.

“Concerns over the future of domestic economic growth are also limiting the rand from gaining fully from positive global financial market sentiment.”

Data on Tuesday showed that South Africa’s economic output recorded its largest contraction ever in the second quarter as a strict lockdown shut down most activity.

Government bonds also weakened, with the yield on the instrument due in 2030 gaining 5.5 basis points to 9.335 percent.

Stocks climbed along with global markets, with the bullion sector up 2.78 percent after spot gold rose to its highest level in over a week.

Gold Fields advanced 1.47 percent to R221.51 and AngloGold Ashanti closed up 3.82 percent to R493.35.

Further gains were seen by bourse heavyweight Naspers, up 2 percent at R2940.02.

The JSE all share index ended the day 1.35 percent firmer at 55953.96 points, its highest level in more than a week, while the blue-chip Top40 index climbed 1.36 percent to 51532.12 points. I Reuters