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Rand inches weaker in wait-and-see session

Traders are cautious ahead of local and US interest rate decisions.

South Africa’s rand edged weaker in subdued trade on Tuesday with market participants awaiting a local lending rates decision and one by the US central bank next week before making any big calls.

At 1500 GMT the rand was 0.1% weaker at 13.9150 per dollar, hardly budging from the overnight close of 13.90.

Early trade saw the rand touch a session best of 13.83 before strong growth in US retail sales re-energised the greenback and dampened expectations of a deep rate cut by the Federal Reserve next week.

Locally, retail sales data due on Wednesday will likely be overshadowed by the policy decision by the South African Reserve Bank (Sarb) on Thursday.

Twenty-four of 30 economists in a survey by Reuters said the Sarb would cut rates by 25 basis points to 6.50% on July 18. Two expected a cut of 50 basis points. The other four said rates would be left unchanged.

On the bourse, stocks rose with other emerging market assets ahead of US economic data releases later on Tuesday that could provide clues to the country’s future monetary policy.

The benchmark Johannesburg Stock Exchange Top-40 Index was up 0.9% to 51 908 points while the broader All-Share Index closed 0.8% higher at 57 996 points.

“I think maybe [there is] a push towards some of the riskier kind of assets that are coming through closer to the interest rate drops,” Bruno van Eck, trader at Thebe Stockbroking, said, referring to the upcoming decision by the US Federal Reserve.

Paper and pulp producer Sappi and energy and chemicals company Sasol were the day’s biggest winners on the blue-chip index with Sappi up 4.26% and Sasol up 3.35%.

Platinum miners Anglo American Platinum rose 1.24% to R804.63 after announcing that they expected their half-year earnings to double.

Bonds were slightly firmer, with the yield on the benchmark 2026 paper down 1.5 basis points to 8.025%.

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