JOHANNESBURG - The rand weakened yesterday as the dollar recovered and government bonds sold off, while investors waited anxiously for a results announcement by cash-strapped power utility Eskom today.
At 5pm, the rand bid at R11.9757 to the dollar, 10.30c softer than at the same time on Friday. The currency gained over 2percent against the dollar last week and is up about 15percent against the greenback since the start of last month.
“Weakness in the rand stems from a slight uptick in the dollar after six weeks of consecutive losses. Markets also seem to be a bit wary in anticipation of Eskom’s financial results tomorrow (today),” said Bianca Botes at Peregrine Treasury Solutions.
The rand has been one of the best-performing currencies globally since mid-December, buoyed by hopes that the new leader of the ANC, Cyril Ramaphosa, will follow through on promises to root out corruption and kick-start economic growth.
Stronger gold prices and a fall in the US dollar have also helped.
Investors will be looking to Eskom’s interim results for clues on the financial health of one of the country’s largest state companies. Ratings agencies regularly cite Eskom as a threat to the country’s already strained public finances.
In fixed income, the yield on the benchmark government bond due in 2026 rose 13 basis points to 8.555percent, reflecting weaker bond prices.
Meanwhile, stocks yesterday maintained a technical correction which started last Thursday after momentum indicators showed the main indices had strayed into overbought territory.
The benchmark JSE Top40 index eased 1.22percent to 53863.76 points, while the wider all share index shed 1.28percent to 60806.90 points.
Capitec Bank fell 7.97percent to R943.90, Nedbank lost 4.34percent to R267.53 and FirstRand was also down 4.34percent to end the session at R67.20.
On Wall Street, major indices were down in afternoon trading, easing from record levels hit last week, weighed down by a slump in Apple after a media report added to concerns about demand for the iPhoneX.
At 5.50pm, the Dow Jones industrial average was down 0.39percent at 26512.3 points.