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The rand rallied against the dollar yesterday and bond yields fell after the central bank cut its main lending rate by 25 basis points in a widely expected move to counter floundering economic growth.

At 5pm, the rand bid at R13.9015 to the dollar, 6 cents firmer than at the same time on Wednesday, having closed at R14.0125 in previous session.

The SA Reserve Bank (SARB) cut rates by 25 basis points to 6.5 percent in a unanimous decision, its first easing since March 2018, although it struck a cautious tone suggesting future reductions to borrowing costs were not a foregone conclusion despite benign inflation.

Bonds also crossed a crucial psychological mark, with the yield on benchmark 2026 government bonds dipping below 8 percent to 7.975 percent, 5 basis points lower on the day.

Stocks closed higher, with miners, retailers and financial firms, all of which benefit from the interest rate decision or its effect on the rand, topping the JSE blue chip index.

The Top40 index rose 0.33percent to 51733.36 points and the broader all share index closed 0.41 percent higher at 57872.53 points.

Among the biggest gainers was British American Tobacco, up 5.94 percent to R539.64 on the back of rival Philip Morris’ better-than-expected second quarter earnings and improved full-year outlook. 

Reuters