RAND GAINS, STOCKS RETREAT

THE RAND strengthened yesterday, aided by the dollar being pinned near a one-month low and greater global risk appetite.

At 5pm, the rand traded at R14.23 to the dollar, around 0.47 percent stronger than its previous close.

The dollar was dragged down by Treasury yields hovering near their lowest in five weeks after the US Federal Reserve reiterated its view that any spike in inflation was likely to be temporary.

Meanwhile, greater risk sentiment, fuelled by expectations that monetary policy would remain accommodative the world over, sent Asian shares to a new high.

“As it is becoming clear that loan growth is not picking up in the US, the bond market is starting to question the reflation trade,” said currency analyst at Nedbank, Neels Heyneke.

“One of the major reasons the ZAR is outperforming the other EMs (emerging markets) is higher real rates. The other major driver is rising commodity prices driving a higher current account.”

Spot gold touched its highest in nearly two months earlier, while platinum and palladium were also up on the day. At 4.30pm local time, gold was at $1 779.30 (about R25 427) an ounce and platinum was at $1 231.05 an ounce.

South Africa recorded large current account and trade surpluses in the last two quarters of 2020 on higher demand for commodities as global trade conditions eased with the falling Covid-19 infections and a subsequent loosening of restrictions on economic activity.

Bonds dipped, as the yield on the benchmark 2030 instrument rose 3 basis point to 9.09 percent.

Stocks fell by almost a percentage on the opening day of the week as investors globally booked some gains, and were followed suit by traders in the local market. The JSE all share index declined 0.88 percent to 68 094.28 points, while the Top40 index dropped 0.91 percent to 62 325.85 points.