Rand softer on education spending fears
THE RAND weakened yesterday after comments by President Jacob Zuma raised concerns about higher spending on education, which would put added strain on the country’s already stretched public finances.
At 5pm, the rand bid at R14.2427 to the dollar, 7.78c softer than at the same time on Wednesday, 0.6 percent weaker than its New York close on Wednesday.
Zuma said in parliament that he would make an announcement on higher education soon.
A currency trader said the market had taken the comments as a sign that free tertiary education would be introduced.
Confirming market concerns about the economic outlook, Treasury said yesterday SA faced a difficult period ahead after an International Monetary Fund visit.
Government bonds were also slightly weaker, with the yield on the benchmark instrument due in 2026 up 1 basis point to 9.305 percent.
Meanwhile, stocks weakened in a volatile market that took its cue from weakness in the currency, with Steinhoff International weighing on the bourse.
The benchmark JSE Top40 index fell 0.4 percent to 53 513.82 points, while the all share index lost 0.36 percent to 59 862.11 points.
Steinhoff shares extended losses from the previous session to close down 1.37 percent at R58.49.
Steinhoff ’s local shares declined to a 10-week low on Wednesday after Reuters reported the company did not tell investors about almost $1 billion (about R14.17bn) in transactions with a related company despite laws that some experts believe require it to do so.
“That’s the thing with volatility, ... if there is any bad news built into a share, say for example a Steinhoff or an EOH, they will get particularly hard hit,” said Independent Securities trader, Ryan Woods.
Further losses were curbed by petrochemicals and energy firm Sasol, which led gains on the blue chip Top40 index, lifting 0.96 percent to R434.96 on the back of a weaker currency and higher oil prices.
Oil prices steadied just below two-year highs supported by supply cuts by major exporters, with Brent crude oil reaching an intraday high of $64.65 a barrel, its highest since June 2015.