Rand falls after poor data, stocks rise

In afternoon trade the rand was 1.59% weaker at R16.88 per dollar.
Image: Shutterstock

South Africa’s rand weakened on Thursday as data showing contractions in mining and manufacturing in July pointed to a slow recovery in the domestic economy.

At 1540 GMT the rand was 1.59% weaker at R16.88 per dollar.

Statistics South Africa agency figures showed on Thursday that mining output fell 9.1% in July while manufacturing was down 10.6%.

On the other hand, the central bank said that the current account balance swung to a deficit in the second quarter as the trade surplus more than halved due to the impact of the Covid-19 pandemic.

“South Africa’s weakening economic fundamentals have dragged down the rand,” Investec economist Annabel Bishop said in a research note.

“Concerns over the future of domestic economic growth are also limiting the rand from gaining fully from positive global financial market sentiment.”

Data on Tuesday showed that South Africa’s economic output recorded its largest contraction ever in the second quarter as a strict lockdown shut down most activity.

Government bonds also weakened, with the yield on the instrument due in 2030 up 5.5 basis points to 9.335%.

Stocks rose along with global markets, with the bullion sector up 2.78% after spot gold rose to its highest level in over a week.

Gold Fields rose 1.47% to R221.51 and AngloGold Ashanti closed up 3.82% to R493.35.

Further gains were seen by bourse heavyweight Naspers which rose 2% to R2,940.02.

The Johannesburg Stock Exchange’s All-Share Index rose 1.61% to 56,100 points, its highest level in more than a week, while the blue-chip Top 40 index gained 1.67% to 51,688 points.

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