Rand gives up gains, banks lead JSE lower

The Mercury - - PRICES - Reuters

FTSE/JSE Africa Index Se­ries

THE RAND weak­ened early yes­ter­day, giv­ing up the pre­vi­ous ses­sion’s gains as in­vestors short on the lo­cal and other emerg­ing cur­ren­cies were squeezed out of those po­si­tions by a swift, al­beit brief turn­around in the Turk­ish lira.

At 5pm, the rand bid at R12.5528 to the dol­lar, 8.92 cents softer than at the same time on Wed­nes­day. The lo­cal unit had ral­lied to R12.40 on Wed­nes­day, spurred by a broad emerg­ing mar­ket re­lief rally af­ter Turkey’s cen­tral bank said it would act to stem a sell­off in the lira.

“With yes­ter­day’s rand rally, what we were see­ing was a bit of vol­ume flush­ing the mar­ket,” said cur­rency strate­gist at Pere­grine Trea­sury Solutions, Bianca Botes.

The re­lief of­fered by the Turk­ish lira stoked a short squeeze as the R12.40 to the green­back level, used as a stop-loss mark by some in­vestors, trig­ger­ing a brief wave of sell­ing as rand bears wary of a run to R12.20 closed po­si­tions.

The rand traded as firm as R12.18 on Mon­day, its strong­est in three weeks, but quickly lost ground to geopo­lit­i­cal wor­ries over Iran as well as the Is­raeli-Pales­tinian con­flict, and gen­eral risk aver­sion in an­tic­i­pa­tion of rate hikes by the US cen­tral bank.

“We saw the rand rally all the way down to around (R)12.20 and, in my opin­ion, that’s a very un­re­al­is­tic level, con­sid­er­ing where the coun­try is from a global and a lo­cal perspective,” Botes said.

The rand has also been un­der­mined by a large exit from dol­lar-funded carry trades, with high-yield cur­ren­cies such as the Mex­i­can peso and the Rus­sian rou­ble also af­fected.

Bonds were weaker, with the bench­mark pa­per due in 2026 yield­ing 8.51 per­cent, 4.5 ba­sis points higher.

Mean­while, stocks weak­ened, led lower by bank­ing shares, as global appetite for emerg­ing mar­kets dwin­dled.

The bench­mark JSE Top40 index closed down 0.83 per­cent at 51 675.02 points, while the all share index dropped 0.75 per­cent to 58 184.25 points.

Bank­ing shares fell 3.18 per­cent, with down 2.61 per­cent to R826.73 and 3.66 per­cent weaker at R203.02.

“Foreign in­vestors have been a lit­tle bit less favourable to South African shares for the last week or so,” said Cratos Cap­i­tal eq­ui­ties trader, Greg Davies.

Capitec Stan­dard Bank

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