Rand firms on weaker dollar

The rand firmed on Tuesday, helped by a weaker dollar as investors awaited minutes of the US Federal Reserve’s June meeting and jobs data that should confirm whether policymakers will raise interest rates twice this year.

Stocks rose despite no-frills bank Capitec coming under pressure amid reports of a regulatory probe.

At 15:27 GMT, the rand traded at 13.67 per dollar, 1.12% firmer than its close on Monday.

The Fed will release minutes of its June meeting on Thursday, and investors will try to gauge whether it is still on track to raise interest rates twice more this year.

“While the local currency has scope to extend gains amid dollar profit-taking, the upside is likely to be limited by a combination of domestic and external factors,” FXTM research analyst Lukman Otunuga said.

“With global trade war fears still weighing heavily on sentiment and stimulating risk aversion, emerging market currencies like the rand are likely to continue feeling the heat.”

The rand has also been hurt by weak local economic data, which has cast doubt on President Cyril Ramaphosa’s ability to kick-start growth after a decade of stagnation.

In fixed income, the yield for the benchmark paper due in 2026 fell 5.5 basis points to 8.84%.

On the bourse, the benchmark Top-40 index rose 0.6% to 51,287 points while the All-Share index gained 0.58% to 57,489 points.

Gains on the bourse were seen from the bullion sector, which rose 1.15% on the back of a stronger spot gold price.

Harmony Gold rose 3.79% to R22.98 and AngloGold Ashanti gained 2.34% to R115.52.

Among the biggest fallers on the bourse, Capitec closed down 3.94% to R853.00 after a report about a probe into the bank sent shares down as much as 5% earlier in the session. The bank dismissed it as “misleading” and “fake news”.

“Some nervous selling creeping in here, in a market where in general volumes have been thin,” said Independent Securities trader Ryan Woods.