Rand falls amid weak economic data

The rand weakened against the dollar in afternoon trade on Wednesday, with market sentiment bruised by indicators painting a bleak outlook for the economy both at home and globally amid the coronavirus crisis.

At 1530 GMT the rand was 1.21% weaker at R18.75 per dollar, giving up gains from earlier in the session. Investors globally dumped riskier assets in the wake of dire economic numbers after shutdowns to stem the spread of the virus.

In South Africa, private sector activity fell to a record low in April, a business survey showed on Wednesday, as temporary company closures led to a collapse in demand.

Africa’s most developed economy is now in its sixth week of a strict lockdown aimed at curbing the spread of the new coronavirus, which has infected more than 7 000 and killed 148.

Manufacturing data in the euro zone and the UK also painted a bleak picture and sent investors piling into safe-haven currencies such as yen and dollar.

Greg Davies, trader at Cratos Capital, said the all share index was pulled upwards by stocks that tend to benefit from a weaker rand, like miners that export their product, or firms with an overseas presence and therefore a rand hedge in place.

British American Tobacco rose 1.90% to R695.73, BHP Group climbed 4% to R311.77, paper and packaging firm Mondi was up 2.50% to R313.44, while mining firms climbed 2.84%.

But miner Harmony Gold closed 9.03% lower after it said it planned to raise up to $200 million via a share issue to fund part of its purchase of AngloGold Ashanti’s last remaining assets in South Africa.

Harmony also said it had withdrawn its annual production guidance for the financial year as it does not have clarity on the ramp-up of production from its mines after the lockdown.

The Top 40 index rose 1.64% while the broader all-share closed 1.32% firmer.

In fixed income, the yield on government paper due in 2030 rose 2.5 basis points to 9.78%.