Proudly sponsored by

Rand weakens as economic concerns weigh, stocks stable

In afternoon trade the rand was at R15.22 versus the dollar, 0.69% weaker than its previous close.
Image: Waldo Swiegers / Bloomberg

The rand weakened on Thursday as focus shifted to bleak economic prospects for Africa’s most industrialised economy.

The rand was trading at R15.22 versus the dollar at 1505 GMT, 0.69% weaker than its previous close.

The rand has in recent weeks been supported by an uptick in global risk appetite, which has hurt the dollar. It has gained 7% against the US currency this month. But focus has once again shifted to South Africa’s frail economic fundamentals.

“South Africa suffered another round of downgrades recently, our house is not in order, and this will have more of a longer term impact on the rand,” analysts TreasuryOne wrote in a note.

Persistent dollar weakness could limit losses in the rand in the short term, “but in the longer term when the Covid fog lifts, the South African bare bones will be laid bare, and the rand could lose the benefit of a weaker US dollar, due to local issues.”

A hard coronavirus lockdown has led to a steep economic contraction, with Fitch and Moody’s downgrading South Africa’s credit rating deeper into “junk” territory last week.

Government bonds weakened alongside the currency, with the yield on the 2030 instrument adding 2 basis points to 8.89%.

Shares on the Johannesburg Stock Exchange (JSE), however, ended the day a tad higher and stayed largely stable on positive momentum across emerging market equities.

The benchmark all-share index closed up 0.31% at 57,924 points and the blue-chip top 40 companies index ended up 0.27% at 53,084 points.

Banks continued to rise, with the banking index climbing 0.16%. The index has gained almost 25% this month on a rally in emerging market equities following positive news about a Covid vaccine.

The gold index, which has shed 18% this month, ended 2.42% higher.

South Africa’s fifth-biggest retailer Mr Price Group jumped 8.4% and was the top mover on the JSE as the company forecast strong growth and reinstated dividends.

COMMENTS   0

You must be signed in to comment.

SIGN IN SIGN UP

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

INSIDER SUBSCRIPTIONS APP VIDEOS RADIO / PODCASTS SHOP OFFERS WEBINARS NEWSLETTERS TRENDING PORTFOLIO TOOL CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: