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Rand retreats, MTN leads stocks higher

Currency pressured by Fed hike bets, lower commodity prices.
JOHANNESBURG – The rand weakened on Thursday as the increasing likelihood of a U.S. interest rate rise this month and lower commodity prices weighed on emerging currencies.

Stocks rose in Johannesburg, however, led by MTN after the mobile firm declared a dividend despite reporting a loss for the first time in 20 years.

By 1500 GMT the rand had weakened 0.65 percent from its New York close to 13.1125 per dollar.

Further signs that the U.S. Federal Reserve is veering toward a March rise in interest rates continued to support the dollar, which was up 0.3 percent against a basket of major currencies.

A drop in commodity prices added pressure on emerging currencies as spot gold fell 0.8 percent while platinum slid 1.4 percent.

A Reuters poll published on Thursday forecast the rally in the rand is on its last legs as demand for emerging market assets ebb and local political risks intensify as the ruling party prepares to elect new leaders.

George Glynos, director at currency specialists ETM Analytics, however, said political risk was relatively mild with no shocks on the scale of December 2015 when President Jacob Zuma fired two finance ministers in three days.

“Off the base of 2015 and 2016, you’d need some really bad news to effect the markets. When you’ve got so much risk priced in you tend to get numb to the day to day news flow,” Glynos said.

On the bourse, the benchmark Top-40 index rose 0.4 percent to 44,837 points, while the All-Share index also climbed 0.4 percent, to 51,893 points.

Shares in Africa’s largest mobile network operator MTN Group jumped 8.3 percent to 126.75 rand after the company said falling into the red would not prevent it from paying a dividend.

“They indicated that they will sustain a (full year) dividend of 700 cents, which investors see as a positive,” said Avior Capital Markets trader Mark Hodgson.

Among the gainers on the benchmark Top-40 index was Standard Bank, which rose 6.54 percent to 155.95 rand after it reported a rise in full-year profit; Impala Platinum which rose 2.80 percent to 43.67 rand; and Gold Fields which gained 2.96 percent to 41.08 rand.

Government bonds strengthened, with the yield on the benchmark paper due in 2026 falling 4.5 basis points to 8.775 percent.


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