Rand regains some ground

File photo: Siphiwe Sibeko.

File photo: Siphiwe Sibeko.

Published Dec 9, 2015

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Johannesburg - South Africa's rand gained early on Wednesday, recovering after hitting a record low in the previous session on a wide current account deficit and commodities' selloff.

On the equities market, the JSE securities exchange's Top 40 futures index was up 0.26 percent, pointing to a strong open for the index at 07h00 GMT.

At 06h36 GMT, the rand was at 14.5800 against the greenback, up 0.14 percent from Tuesday's close at 14.6000. The local currency hit a record low of 14.7000 in the previous session.

The rand's move this week has been volatile, touching several record lows on weak domestic economic data, ratings jitters and broader commodity weakness.

“Sentiment will spill into today but it is instructive that foreign investors have not been rushing for the exits,” said Rand Merchant Bank currency strategist John Cairns.

Yet, with a looming US rate hike and a third quarter current account gap of 4.1 percent of GDP recorded on Tuesday, there are lingering concerns in the local market.

The US Federal Reserve kept interest rates unchanged in September and left the door open for a possible hike this month, which remains an issue for global capital flows for emerging market economies with wide current account deficits.

“With the Fed rates decision around the corner, a turnaround in our local markets seems quite distant,” said Rand Merchant Bank bond trader Gordon Kerr.

Analysts said the rand could hold on to gains if local inflation data due this morning surprises in a positive manner, but remains under pressure on a commodity rout.

Government bonds recovered alongside the rand, with the yield for the benchmark instrument maturing in 2026 shedding 2.5 basis points to 8.800 percent.

REUTERS

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