JOHANNESBURG - The rand weakened yesterday, tracking the euro and other emerging market currencies as the dollar’s recent rally was reignited by renewed bets of higher lending rates.
At 15.56pm, the rand was 0.24percent weaker at R12.54 to the dollar compared to a close of R12.51 on Friday in New York.
The dollar climbed back towards its highest level of 2018 yesterday with more investors going long as the probability of a rate hike by the US Federal Reserve shifted to near certain, diminishing the appeal of high-yield currencies such as the rand.
Lower global prices for gold, one of South Africa’s key exports and sources of foreign currency, also weighed on the rand. Spot gold was down 0.2percent.
“It is worth noting that at last week’s close of (R)12.50, the rand is still somewhat stronger than a year ago, and it is therefore premature to worry about upward pressure on inflation,” said analysts at Old Mutual in a note.
Bonds were firmer, with the yield on the benchmark paper due in 2026 down 2.5 basis points to 8.32percent.
“Where the weaker rand does help is on the JSE, where the largest companies generate most of their revenues abroad,” said Dave Mohr and Izak Odendaal of Old Mutual.
Meanwhile, stocks ended higher, led by financials and retailers. However, gold stocks were down, led by Sibanye Stillwater, which tanked 7.69percent to R9.97.
The all share index was up 0.4percent to 57880.72 points, while the benchmark Top40 index rose 0.54percent to 51148.85 points.
Sibanye’s shares fell after seven miners died at one of its Johannesburg gold mines following an earthquake on Thursday that caused a cave-in.
“They have taken quite a big knock and obviously the market has taken the share down on the back of those fatalities,” said Ferdi Heynke, portfolio manager at Afrifocus Securities.
Overall, gold stocks ended weaker, with the gold miners’ index down 2.36percent on the day.
Capitec Bank gained 2.59percent to R869.99 and Nedbank was up 1.94percent at R297.15.
Bidcorp, which has businesses in Britain, Australia and the Middle East, rose 2.94percent to R280.