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Rand firm extends gains after US rate hike, stocks firm

Currency gains along with other emerging markets.

JOHANNESBURG – The rand extended gains against the dollar on Thursday after the U.S. Federal Reserve raised interest rates but signalled a gradual pace of rate hikes, while stocks rode a commodity rally higher.

At 23:50, the rand had firmed 0.36% to 12.7648 against the dollar as most emerging market currencies gained against the retreating greenback. It earlier hit a 19-month high of 12.6825.

“What we’re seeing is that the rand and many other emerging markets and commodity currencies have benefited from this week’s global developments,” said Macquarie First South Securities economist Elna Moolman.

After increasing the interest rate, the Fed stuck to its projections of three total rate hikes in 2017, instead of four, as was expected by many.

In fixed income, the yield of the benchmark government bond due in 2026 was down 12.5 basis points to 8.53%.

A broad-based commodities rally helped propel stocks higher as well as news that Indian billionaire Anil Agarwal was buying a 2 billion pound ($2.45 billion) stake in Anglo American , signalling a possible return to large-scale dealmaking in the sector.

Anglo’s Johannesburg shares shot up 6.5% to R203.47.

The benchmark Top-40 index closed 1.94% higher at 45,523.12 while the wider All-share index added just over 2% to 52,748.97.

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Mark Swanepoel

Mark Swanepoel

Axiomatic Consultants
Moneyweb Click an Advisor
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Moneyweb Investor Issue 24

The relative strength of the rand has seen South Africans relax since the cabinet reshuffle and sovereign downgrades by S&P and Fitch. Don't be deceived - this is a self-inflicted wound. In the May issue of The Moneyweb Investor, we take a closer look to see which companies are likely to thrive and which will not, in the post-downgrade world.