Rand firms after US midterms dent dollar; stocks higher

The rand firmed against a weaker dollar on Wednesday after US midterm elections split Congress, lowering the chance of any major US fiscal policy boost soon.

Stocks recovered marginally from a sell-off ahead of the elections.

At 1505 GMT, the rand traded 1.04 % stronger at 13.97 per dollar, having earlier hit a session best of 13.88.

The dollar index was down 0.43 %.

“After US election results showed a split between the Republicans and Democrats, which will limit Trump’s powers, the dollar has taken cue and weakened,” said Afrifocus Securities portfolio manager Cheslyn Francis

Domestic data also helped the rand.

Business confidence rose for a second month in October, bolstered by higher import volumes, vehicle sales and retail sales, a survey by the South African Chamber of Commerce and Industry (Sacci) showed.

“The business confidence rising another month, showing business transactions are brisk, provided positive headwind for the rand and also fuelled stocks,” Francis said.

The rand has been on the back foot since it was announced in September that the economy had entered a recession.

Bonds firmed, with the yield on the government’s 10-year paper down 7 basis points to 9.070 %.

On the bourse, the all-share index rose 0.46 % to 54,700 points while the blue chip top 40 index was 0.36 % higher at 48,295 points.

Banks were 2.3% higher. Retailer Woolworths Holdings rose 5.68% to 56.21 rand while Mr Price was up 4.92% to R248.76.

“The market is doing much better after a cautious sell-off yesterday,” said analyst Ryan Woods.

“After the results of the US midterm elections, we’re starting to see more market certainty.”

Telecoms firm Vodacom was down 0.39% after it said it had entered into a roaming and facilities leasing agreement with Telkom, South Africa’s biggest fixed-line operator. 

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