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Rand climbs to two-week high, stocks down

Investor appetite for emerging markets drives currency.

The rand raced to a two-week high on Thursday as investor appetite for riskier but high-yielding emerging markets assets improved and data eased concerns about the domestic economy.

Stocks were down, with Gold Fields the biggest loser among the blue-chips, as the firmer currency weighed on gold mining firms’ earnings.

At 1510 GMT, the rand traded at 13.46 per dollar, 0.44% firmer than its close on Wednesday, and trading at its strongest levels since September 29.

In fixed income, the yield for the benchmark government bond slipped 3 basis points to 8.675%.

After coming under pressure from a stronger dollar in recent weeks, the rand has been on the mend for three consecutive sessions as higher bond yields lure foreign investors into the domestic market, boosting the currency.

Demand for the rand also comes as concerns over South Africa’s economic growth have been soothed this week by stronger-than-expected manufacturing and mining data.

“We’ll know more when retail sales data are released on October 18. But the data available so far all support our non-consensus view that South Africa’s economy stayed strong in (the third quarter),” Capital Economics Africa economist John Ashbourne said.

The Treasury said finance minister Malusi Gigaba would use meetings during the International Monetary Fund and World Bank annual conference in Washington to convince investors and ratings firms the economy was improving.

On the stock market, the benchmark Top 40 Index was down 0.2% at 51 353 points, while the broader All Share Index declined 0.04% to 57 747 points.

The market remains constrained by technical factors, with the 14-day RSI, a momentum indicator, showing that the main indices have shot into overbought territory at current levels. This often heralds a downward correction in the market.

E-commerce and media firm Naspers, which owns a third of China’s Tencent, shed 0.6% to close on R3 200 after scaling an all-time peak of R3 227.35 in intra-day trading.

Gold Fields declined 2.9% to R54.36, as the firmer currency weighs on gold mining firms’ earnings.

Miner Pan African Resources ended 0.87% lower at R2.28 after the company’s CEO told Reuters that its R1.7 billion project in South Africa to produce gold from mine dumps has been halted the past two days because of protests and assaults on its workers. 

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