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Rand falls on US rate hike bets, stocks rise

Stocks gained led by the retail sector.

JOHANNESBURG – South Africa’s rand fell as much as 1.3% against the dollar on Wednesday, mainly reflecting broad dollar gains as investors increasingly price in a US rate hike next month, traders and analysts said.

Stocks rose, however, as buyers piled back into the oversold retail sector. The benchmark Top-40 index rose 1.17% to 43,592 points while the All-Share index added 1.16% to 50,005 points.

The rand hit a session low of 14.3850 per dollar before clawing its way back to 14.3415 by 23:55, still down 1.16% from Tuesday’s New York close of 14.1800.

“It’s just a lot of dollar strength at the moment. As we head towards December everyone’s expecting a US rate hike to happen. I think it’s been priced in about 90% now,” Treasury One dealer Phillip Pearce said.

“We’ve found a whole new range now between 14.1000 and 14.5000 and we’re going to be bouncing between that until we have clear guidance after the (Federal Reserve) meeting.”

On the bourse, the retail index climbed 3.11% after official data showed a 1.4% year-on-year rise in retail sales.

“They are looking a bit oversold at the moment and there’s a lot of hope that we are close to the top of the interest rate cycle,” Standard Bank Stockbroking trader Rudi van der Merwe said.

No-frills retailer Mr Price recouped some of its heavy losses from the previous session, adding 5.89% to R141.89, while The Foschini Group gained 2.88% to R135.65 and Truworths International was up 3.41% to R68.50.

Grocery retailer Spar Group rose 3.94% to R182 after reporting a 22.1% rise in full-year profit.

Trading was below average, with slightly more than 250 million shares changing hands, compared with last year’s daily average of 296 million.

Government bonds edged higher across the curve, and the yield for 10-year debt dipped 4 basis points to 9.015%.

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