SA rand rebounds as global selloff slows
JOHANNESBURG - South Africa’s rand firmed on Tuesday, recovering most of its losses as emerging markets broadly recovered from heavy selling in the previous session triggered by a dive in oil prices and fears about the economic impact of the coronavirus.
Stocks rose in line with a rebound in global markets, while FirstRand shares rose after half-year profits.
At 5pm (local time) the rand was 0.21% firmer at 16.0760, having tumbled to just short of 17.00, a four-year trough, on Monday as panic selling in Asia spread to the south and western hemispheres.
“We can expect the rand to continue in a broad range, while a break below R15.85 will affirm a move stronger for the local unit,” said Bianca Botes, Treasury Partner at Peregrine Treasury Solutions.
A price war between top producers Saudi Arabia and Russia triggered the biggest daily rout in oil prices since the 1991 Gulf War, with crude prices diving more than 25%, kindling a deep selloff across risk assets already reeling from coronavirus fears.
But an announcement by the United States of plans to take more measures to support its economy soothed some of those worries, while a rebound in oil prices also helped risk demand.
On the bourse, the benchmark Top-40 index gained 1.29% to 44,252 points while the All-Share index rose 1.32% to 49,466 points.
FirstRand closed up 4.52% to 52.60 rand after posting a 5% rise in interim profit.
“The results were pretty decent given the torrid trading conditions we are facing. Bad debts are rising and that is obviously a concern so that put somewhat of a dampener on what would have ideally been a very good set of results in the current market conditions,” said Ryan Woods, a trader at Independent Securities.
Curbing further gain, bullion stocks fell 7.7% amid profit taking after risk sentiment improved, with AngloGold Ashanti down 8.25% to 301.87 rand and Gold Fields 5.51% lower at 102.60 rand.
Bonds also recovered, with the yield on the government issue due in 2030 down 4.5 basis points to 9.175%.