Rand hits 15-month best against dollar

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Rand hits 15-month best against dollar

6:55 CAT | 14 Feb 2017

Reuters / Stocks are weaker, while bonds are firmer.

South Africa’s rand raced to its firmest in more than 15 months against the dollar on Tuesday, helped by improved risk appetite and jobs data suggesting the economy is improving.

Stocks were weaker, with the main bourse dragged lower by miner Kumba Iron Ore after the company said it was still not in a position to pay shareholders a dividend despite seeing a doubling in earnings.

By 1140 GMT the rand had gained 1.63% to 13.1225 per dollar, its strongest since October 23, 2015 according to Thomson Reuters data, after closing at 13.3400 overnight in New York.

“It’s really a technical move and a continuation of recent momentum. There’s been pressure for a while on the dollar/rand to break lower and now it’s happened,” said Jim Bryson, currency trader at Rand Merchant Bank.

“Now we need to see a close at around 12.90 to confirm the move and maybe see the rand strengthen further.”

The rand kicked off local trade on the front foot as the dollar came under pressure after the resignation of US National Security Adviser Michael Flynn. It made further gains as South Africa’s unemployment rate pulled back from its highest in 13 years.

Technical and momentum indicators point to the rand extending the rally after struggling to break short-term resistance around 13.40 for the past two weeks, although it remains vulnerable to swings in global sentiment.

A Reuters poll of 39 strategists last week saw the rand weakening around 8% in 2016 as the government struggles to keep public spending down, and as rates are expected to rise in the United States.

On the bourse the Top 40 index was down 1% to 45 471 points while the wider All-Share index was 0.9% weaker at 52 473.

The mining index was down 1.28% as Kumba, Impala Platinum and African Rainbow Minerals all slid more than 2%. Kumba was the biggest loser, down 5.6% to R212.71.

In fixed income, bonds were firmer with the yield on the benchmark government issue due in 2026 shedding 10.5 basis points to 8.625%.

Source: Reuters