Rand volatility continues, JSE rebounds

THE RAND’S volatility continued yesterday with the domestic currency trading in a range of R14.32 to R14.64, with no local data influence.

TreasuryOne senior currency dealer Andre Botha described the rand’s recent reaction as strange compared with its emerging market peers.

“We have seen the main driver of emerging markets weakness over the past week – Turkey – gaining significant ground against the US dollar but none of that spilt over to South Africa. In fact, the rand lost a fair amount of ground yesterday (Wednesday) trading at R14.74 in the afternoon,” he said.

Botha cited Moody’s as one of the reasons for the currency’s odd reaction. “The other local factor was the speculation about how land redistribution will work by Gwede Mantashe (Mineral Resources minister). Whether this is feasible is another story, but with uncertainty still regarding the issue, the land issue will remain in the mind of the market for the foreseeable future.”

At 5pm, the rand bid 5 cents weaker than Wednesday’s same time bid at R14.62 a dollar. Against the pound, the rand was 10c softer at R18.61 and to the euro the currency eased 13c to R16.66.

Peregrine Treasury Solutions corporate treasury manager Bianca Botes said the rand remained steeply oversold and the slide on Wednesday came as a surprise to most market participants.

“The broad-based emerging market sell-off continues, causing a currency bloodbath in its wake, with the Mexican peso, Russian rouble and South African rand being among the victims,” she said.

Botes said local factors were also adding to the rand’s woes as June retail sales came in significantly lower than expected at 0.7 percent and Eskom locked horns with trade unions once again.

Meanwhile, the JSE recovered form Wednesday’s Naspers-led rout, with the blue chip Top40 index up 1.8 percent to 50 506.38 points, while the broader all share index rose 1.65 percent to 56 562.34 points.

Leading gainers included Exxaro, which gained 7.99 percent to R140, African Rainbow Minerals up 4.64 percent to R116.48 and South32, which added 3.98 percent to R35.77. Sanlam climbed 3.74 percent to R74.66 and Vodacom advanced 3.31 percent at R127.66.

Tiger Brands led the losers, tanking 8.94 percent to R298.33.