File image: IOL
The rand retreated against the dollar on Friday as traders looking ahead to the new week took profits from the currency’s rally to a two-and-a-half month best, with worries about the state of the economy creeping back into sentiment.

At 5pm, the rand was bid at R12.933 to the dollar, 9.13c softer than at the same time on Thursday, its weakest in two sessions, having closed at R12.80 overnight.

The rand has gained about 5percent in the past 30 days as political tensions between the US and North Korea simmered, benefiting from its role as a major exporter of safe haven gold.

It managed to break through crucial technical levels including the 200-day moving average.

Data on Tuesday showing the economy had shaken off recession spurred the rally, but figures later in the week showing key sectors of the economy remained subdued dimmed sentiment and saw short selling on the unit.

Bonds were also weaker, with the yield on the benchmark 2026 paper up.

Meanwhile, stocks eased on Friday, moving further away from record peaks scaled two weeks ago as investors took profits and a euro rally hit European stocks.

“We are seeing a pull back from those highs, some profit taking has come into the market,” said Ferdi Heyneke, portfolio manager at Afrifocus Securities.

The benchmark JSE Top40 index dropped 0.32%to 49274.03 points, while the wider all share index declined 0.27% to 55724.67 points.

The all share index has declined 2% since it hit a record high of 56896 on August25, well within striking distance of a fresh peak.

On the global front, the dollar slumped near its lowest levels in more than two-and-a-half years on Friday as the euro continued to shine after European Central Bank president Mario Draghi’s suggestion that the bank may begin tapering its massive stimulus program this fall.

Also dampening the dollar and lowering the chances of another rate hike was an agreement in Congress to push US debt ceiling talks three months down the road to December, coinciding with the Federal Reserve’s policy meeting.

Meanwhile, gold retreated after touching a one-year high on lowered expectations of a December interest rate hike in the US.