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South Africa’s rand eases after U.S rate hike, stocks rise

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s currency weakened on Thursday after the United States central bank raised its key lending rate, while Moody’s decision to change its outlook on Pretoria’s credit rating to negative also pressured local assets.

By 0700 GMT the rand had weakened 0.27 percent to 14.9750 per dollar, giving up some of the gains of the previous two sessions sparked by the naming of Pravin Gordhan as finance minister.

Government bonds firmed, with the yield on the benchmark paper due in 2026 shedding 12 basis points to 9.4 percent.

On the equities market, the benchmark Top-40 index opened up 1.3 percent at 44,305 points.

While markets had anticipated the 25 basis points rate hike by the U.S. Federal Reserve, emerging market assets still suffered, put under pressure by the hawkish tone of Fed Chair Janet Yellen’s speech.

“After knee-jerk weakness the dollar has gained significantly,” Rand Merchant Bank currency analyst John Cairns said in a note. “We suspect this will pressure USD/ZAR to the upside through the course of the day.”

Yellen said further monetary tightening would be gradual and data-dependent, while pointing out an improved economy and labour market, raising the likelihood of more hikes in 2016.

Moody’s cut its outlook on South Africa to “negative” from “stable” late on Tuesday, citing structural challenges in the mining industry and increasing political pressures on the budget.

In local data, South Africa’s statistics agency publishes producer price inflation data for November at 0930 GMT.


(Reporting by Mfuneko Toyana; Editing by Ed Cropley)

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South African rand steadies but looming U.S. rate hike poses risk

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand was largely unchanged against the dollar in early Wednesday trade but analysts said the short-term prognosis was for the currency to weaken as U.S. interest rates look set to rise.

The JSE securities exchange’s Top-40 futures index was up 0.6 percent, indicating the actual index would open 265 points higher.

At 0648 GMT the rand traded at 14.0250 versus the dollar, barely moved from Tuesday’s New York close at 14.0370.

The rand was aided by broad-based dollar losses as investors cut crowded long positions in the lead-up to the U.S. Thanksgiving holidays.

“The rand will continue to be vulnerable for further depreciation as we approach the start of U.S. monetary policy normalisation – widely expected to happen in mid-December,” NKC African Economics said in a note.

“Higher local interest rates will not remedy this situation as the rand remains at the mercy of broader emerging market sentiment.”

The rand has given up most of last week’s gains after pushing to 2-1/2 week highs following a surprise 25 basis point hike in rates by the South African Reserve Bank.

Government bonds edged higher on Wednesday, and the yield for benchmark debt due in 2026 dipped 2 basis points to 8.43 percent.


(Reporting by Stella Mapenzauswa; Editing by Ed Cropley)

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South Africa’s rand on firmer footing after rate hike, stocks also gain

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand traded at two-week highs against the dollar on Friday, still boosted by the central bank unexpectedly raising interest rates the previous day to curb inflation pressures.

Stocks ended slightly higher, led by Mr Price as investors piled into the discount clothes retailer after a broker upgraded the stock to ‘buy’.

The rand climbed to 13.8900 per dollar during Friday’s session, its strongest since Nov. 6, and was trading at 13.9300 by 1550 GMT, up 0.7 percent on the day.

This was after the central bank raised the benchmark repo rate by 25 basis points on Thursday, warning that failure to act on inflation risks could worsen the country’s already weak growth.

Traders and analysts however warned the currency could come under renewed pressure should the U.S. Federal Reserve hike lending rates in the world’s biggest economy in December, as widely expected.

“The rand is in an interesting attempt to establish a new, bullish channel, but it is unlikely to persist through

December, as market jitters arise again in the lead up to the December FOMC (Federal Open Market Committee),” Investec analyst Annabel Bishop said.

“While it could test 13.5000/dollar, it could equally show a lightening turnaround to attempt to test the level a rand higher.”

The rand has given up nearly 17 percent of its value against the dollar this year, mainly because investors are betting on higher U.S. rates dumping emerging market assets which offer relatively higher yields but also carry more risk.

On the local bourse, the blue-chip JSE Top-40 index added 0.24 percent to 46,963 and the broader All-Share index gained by the same margin to 52,240.

Mr Price, which also reported a 16 percent increase in half-year earnings this week, jumped 8.7 percent to 200.01 rand, booking its biggest daily percentage gain in more than seven years.

Brokers at HSBC raised their rating on the stock to “buy” from “hold” and upgraded their price target to 200 rand from 195.

Other gainers included Tiger Brands, up 5.9 percent to 357 rand, a level last seen in February. Investors have welcomed news that Tiger Brands will no longer provide funding to its money-losing Nigerian unit.

On the downside, MTN Group was off 1.25 percent at 142 rand as it battles to reduce a $5.2 billion fine in Nigeria.

Overall, traders took their cue from higher overseas markets, where sentiment was helped by growing expectations of more European Central Bank stimulus.

Trade was robust with more than 328 million shares changing hands, well above last year’s daily average of 183 million shares.

The bullish tone on South African markets extended to fixed income, where the yield for paper due in 2026 reached its lowest since Nov. 4 at 8.4 percent.

It ended Friday’s session at 8.415 percent, down 4 basis points from Thursday.


(Reporting by Stella Mapenzauswa and Tiisetso Motsoeneng; Editing by Andrew Roche)


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South Africa’s rand, stocks strengthen after rate hike

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand hit a two-week high against the dollar on Thursday after the central bank governor raised the repo rate, while shares rose led by Gold Fields which reported a much-improved quarter.

By 1548 GMT the rand was at 14.0020 versus the greenback, up 1.16 percent from Wednesday’s close. The currency had earlier touched a session low of 14.2155 to the dollar.

The central bank lifted interest rates by 25 basis points to 6.25 percent, to curb future inflation risks.

“One thing possibly working on the rand’ s favour on a relative basis is that the SARB has been one of the more proactive central banks in EM in that it has started its hiking cycle before the Fed,” HSBC Bank senior currency strategist Dominic Bunning said.

“This may provide some breathing room for the currency relative to others whose central banks might be seen as more “behind the curve”, he said.

Government bonds however, weakened across the curve with the yield on the benchmark government bond maturing in 2026 adding 1 basis points at 8.465 percent after shedding more than 9 basis points after the rate decision.

On the stock market, the benchmark Top-40 index rose 0.83 percent to 46,851 points while the All-share index climbed 0.89 percent to 52,116 points.

Shares in Gold Fields, which also reported flat normalised earnings for the third quarter, closed 17 percent higher at 36.26 rand, after rising as much as 29 percent, when it said it expected further improvements in its South Deep mine while reviewing the future of its costly Damang operations.

“Gold production at South Deep is up quite nicely in quarter and guidance for the year is decent,” said Noah Capital Markets analyst Rene Hochreiter.

Trade was brisk with 233 million shares changing hands, compared to last year’s daily average of 187 million shares.


(Reporting by Nqobile Dludla and Zandi Shabalala; Editing by James Macharia)

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South Africa’s rand falls to record low on strong U.S. jobs data

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand weakened sharply to a record low against the dollar after firmer-than-expected non-farm payrolls data from the United States on Friday.

By 1413 GMT the rand had slipped 2.0 percent to 14.1700, its weakest level ever against the greenback as the growing likelihood of a rate hike by the Federal Reserve in December pressured emerging assets.

“The move is dollar bound, because of the non-farm payrolls. It means they (U.S. Fed) can start lifting interest rates and that is obviously bad for the rand,” NKC African Economics chief economist Christie Viljoen said.

The local unit ignored central bank data showing domestic net gold and foreign exchange reserves edged up slightly to $41.308 billion in October but succumbed to dollar strength following the positive jobs data.

The dollar rose to a 6-1/2 month high after the U.S. jobs report beat expectations, increasing 271,000 last month to its largest rise since December 2014.

Stocks also fell, with the blue-chip index down 2.5 percent to 47,332 points following the U.S employment figures.


(Reporting by Mfuneko Toyana; Editing by James Macharia, Reuters)

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South Africa’s rand benefits from dollar weakness, stocks climb

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand edged up against the dollar on Friday, mainly reflecting the greenback’s weakness against a basket of currencies and also buoyed by data showing a narrower South African trade deficit in September.

The Top-40 index on the Johannesburg Stock Exchange ended in the black for the first time this week as traders showed appetite for resource shares and renewed confidence in Africa’s largest mobile operator.

The rand hit a session high of 13.7645, and was trading at 13.8375 by 1504 GMT, a 0.4 percent gain over Thursday’s close.

South Africa’s trade deficit narrowed sharply to 0.89 billion rand ($65 million) in September from a revised 10.14 billion rand shortfall in August, data from the national revenue agency showed.

The local currency was however still down 1.5 percent this week to the dollar, partly due to week-long protests against high university fees which highlighted the economic woes facing Africa’s most developed economy, and dented investor sentiment.

The rand has also been under pressure for much of this year, as investors anticipating the start of policy tightening in the United States dump high yielding but riskier emerging markets.

“A stronger-than-expected payrolls print next week could very well place further pressure on the rand,” BNP Paribas Cadiz Securities economist Jeffrey Schultz said, referring to U.S. jobs numbers due out next Friday.

On the debt market, the benchmark government bond due in 2026 edged higher, with the yield shedding 6 basis points to close at 8.34 percent.

South African stocks ended positive for the first time this week, driven by strong gains in the resource sector, spurred by an appetite for shares in Anglo American.

The diversified miner was the biggest winner on the blue-chip Top-40 index climbing more than 3 percent to end at 116.46 rand.

Shares in mobile giant MTN Group shot up as high as 3 percent, its first gains this week, after slumping about 20 percent since Monday when it was fined $5.2 billion for failure to cut off users with unregistered SIM cards.

MTN’s shares closed 2.2 percent up to 158.80 rand.

“The general feeling is that the fine will more than likely be reduced to something more manageable, like $1 billion,” Inkunzi Wealth Group senior trader, Petri Redlinghuys, said.

The Top 40 index rose 0.79 percent to 48,317 points while the All-share index was up 0.73 percent at 53,793 points.

Trade was tepid with 180 million shares changing hands, almost on par with last year’s daily average of 183 million.


(Reporting by Stella Mapenzauswa and Peroshni Govender; Editing by James Macharia, Reuters)

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South Africa’s rand firmer after weak U.S. data, stocks fall

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand recovered from three week lows on Monday, aided by a weak greenback after softer than expected U.S. new home sales dropped to near one-year low while stocks fell, led by telecommunications provider MTN.

At 1500 GMT the rand firmed 0.23 percent to 13.6080 per dollar, after touching its weakest since October 6 on Friday as upbeat manufacturing data from the United States put bets of a rate hike there back on the table.

Yields on government bonds were down across the curve, with the benchmark paper due in 2026 shedding 0.5 basis point to 8.345 percent.

The greenback dipped as a steeper-than-forecast drop in new home sales stirred doubts about the U.S. economic recovery ahead of a two-day policy meeting of the Federal Reserve, where policy makers are expected to keep rates unchanged.

While there has been an improvement in risk appetite in the near term, traders warned that the rand could be under pressure no matter what the Fed decides with plenty of local negativity available for investors to latch on to.

“Unfortunately, rand strength will be limited. There might be some after the Fed comes out with a no hike in interest rate but it’s probably going to be short lived,” said Ion de Vleeschauwer a chief forex dealer at Bidvest Bank.

“The rand has got its own problems,” he said citing South Africa’s strained economy. “You need economic growth for people to invest in your economy and if you don’t have it, they will disinvest.”

On the stock market, the blue-chip Top 40 index fell 0.47 percent to 48,569 points while the All-share index slipped 0.27 percent to 54,150 dragged by telecommunications provider MTN.

Shares in Africa’s largest mobile operator fell more than 15 percent but closed 12.49 percent lower at 167 rand, after its Nigerian operation was fined $5.2 billion for failing to disconnect subscribers with unregistered and incomplete SIM cards.

“Whenever the Nigerian regulator steps up enforcement, MTN takes a hammering,” Africa Analysis telecoms analyst, Dobel Pater said.

MTN said it was in discussions with the Nigerian Communications Commission (NCC) to resolve the matter.

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South African rand hit by student protest outside presidential offices

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JOHANNESBURG (Reuters) – South Africa’s rand touched a 3-1/2 week low against the dollar on Friday as investor sentiment soured over the two week long student protests over tuition fees that have hit universities countrywide.

By 1412 GMT the rand was trading 1.26 percent down at 13.5740, reversing earlier gains as a stronger dollar also weighed down the local currency.

“The student protests doesn’t reflect well to offshore investors and the fact that the government is already under pressure from a fiscal perspective and the situation adds to pressure going forward,” said Ricardo Da Camara, market analyst at ETM Analytics.

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