The rand recovered on Tuesday as traders who sold the currency and bought the dollar in the previous session took profits on the fall to one-year lows, locking-in positions at cheaper levels.
Gold producers dragged the bourse lower.
The rand was 0.4% firmer at 14.42 per dollar compared to Monday’s 12-month low of 14.57, hit as investors fretted about changes at the Treasury and a fee-free university education plan by President Jacob Zuma.
“The move lower has run out of steam. The current levels look like an opportunity to lock-in profits while the news flow has settled down,” said Halen Bothma, market analyst at ETM Analytics.
Volumes were concentrated around 14.44, a recent technical support level and target for short sellers looking ahead to local and offshore lending rates moves as well as ratings decisions in coming weeks.
Demand for the rand was also supported by a bond auction that saw the Treasury increase issuance of long-dated paper to R3.3 billion from a weekly R2.65 billion.
While the auction was fully subscribed, yields at the jumped significantly, by as much as 61.5 basis points for the 2031 paper, a sign analysts said of rising trajectory of borrowing costs as the threat of credit downgrades intensified.
The yield on the benchmark 10-year bond was up 1.5 basis points to 9.46%.
On the bourse, the Top 40 Index of blue-chip stocks was down 0.48% at 53 273 points, while the wider All Share Index was 0.51% down at 59 518 points.
Gold producers such as Harmony Gold, AngloGold Ashanti and Sibanye Gold were dragged down as the gold price hovered a one-week low.
Harmony’s shares fell 3.76% to R25.36, Anglo slipped 4.22% to R137.45 and Sibanye dropped 3.3% to R19.61.
The firmer rand also hurt miners, making the companies’ shares less desirable as it meant higher input costs for the already heavily leveraged firms.
Chrome producer Tharisa jumped 5.1% to R19.44 after the mining company it expected full-year profits to rise up to four fold.