Rand recoups losses, Naspers weighs on JSE

THE RAND gained more than 2 percent yesterday, bouncing off a two-year low struck a day before, when investors dumped emerging market assets because of fears over the Turkish economy.

At 5pm, the rand bid at R14.2007 to the dollar, 10.89 cents firmer than at the same time on Monday, around 1.5 percent stronger on the day and nearly 10 percent firmer than its weakest on Monday.

The unit had earlier firmed more than 2 percent to a session high of R14.02 to the greenback.

Government bonds also firmed, as the yield on the benchmark government bond maturing in 2026 fell 10.5 basis points to 8.945 percent.

The rand, one of the most traded emerging market currencies worldwide, is highly susceptible to swings in sentiment on global markets.

On Monday the rand was rattled by a plummeting Turkish lira , which has been dragged lower by worries over President Tayyip Erdogan’s calls for lower interest rates and worsening ties with the United States.

“The rand remains at risk amongst the EM currencies, depreciating as risk-aversion rises, and strengthening in neutral to risk-on periods. The latter is more likely to occur at year end,” Investec chief economist Annabel Bishop said in a note.

“The recent tumult has meant that R14.00/USD has become the new key resistance level for the rand to break on the lower side, and the currency is likely to attempt this quarter.”

The lira gained yesterday after the central bank pledged to provide liquidity, helping lift the mood on Asian markets.

The rand is down 13 percent against the dollar this year.

Meanwhile, on the bourse, shares ended weaker as stocks that benefit from the rand strength struggled to lift the market.

The blue chip JSE Top40 index was off 0.52 percent to 51 551.75 points while the broader all share index gave up 0.48 percent at 57 608.94 points.

Market heavyweight Naspers retreated 2.06 percent to close at R3 335 following technology firm Tencent’s 3.43 percent slump in Hong Kong trade.

Among the biggest decliners, Gold Fields dropped 13.82 percent to R41.84 after it reported plans to cut costs and 1 100 jobs at its struggling South Deep mine.