File Image: IOL
JOHANNESBURG - South Africa’s rand firmed yesterday as the dollar fell, but was on track for a weekly loss as escalating global trade tensions and concerns over the health of the local economy weighed on sentiment.

On the stock market, shares rose for a second straight session, led higher by banking stocks.

At 5.20pm (SA time), the rand was trading at 13.7175 to the dollar, 0.4 percent firmer than its close on Thursday.

However, the currency, which slipped to a 7-month low on Thursday, was on track to end the week 2 percent weaker, according to Thomson Reuters data.

The rand, like its emerging market peers, was hurt by fears of a global trade war.

Trade tensions are set to remain high, with the US administration due to activate tariffs on Chinese goods worth $34billion on July 6, which is expected to prompt a tit-for-tat response from Beijing.

Locally, a stalemate in wage talks between power utility Eskom and labour unions has added to bearish sentiment. Eskom on Thursday raised its wage increase offer to 6.2 percent from 4.7 percent.

“The rand is taking the biggest bashing among emerging markets currencies due to poor economic growth, unfavourable financing needs and wage talks at Eskom,” Rand Merchant Bank analyst Isaah Mhlanga said.

In fixed income, the yield for the benchmark paper due in 2026 fell 10 basis points to 8.835 percent.

The blue-chip Top 40 index was up 3.49 percent to 51516 points, while the all share index was up to 3.25 percent to 57610 points.

Financials were in demand with the banking index up 4.65 percent. FirstRand Bank Group rose 5.95 percent to R63.89 followed by Rand Merchant Bank which gained 5.09 percent to R75.84.

“Now there is a bargain for stocks and buying opportunity. Also there is a fear of missing out, people are rushing back into the market,” said Cratos Capital trader Greg Davies.

Resources also advanced with Anglo American Platinum Limited climbing 5 percent, while Lonmin rose 7.64 percent to R7.75. 

- REUTERS