Rand gains on stalled dollar rally, Turkish lira fall

The rand gained more than one percent on Tuesday, reversing the previous session’s losses as the dollar rally paused and investors sought alternatives to the Turkish lira.

The Turkish lira’s fall to a record low on Monday after Washington said it was reviewing Turkey’s duty-free access to the US market saw some investors looking for returns in South African assets and elsewhere in emerging markets.

At 15:00 GMT the rand gained 1.13% to 13.2875 per dollar compared to an overnight close of 13.4400.

“Directional momentum is still a little lacking and more range trading looks like the most probable outcome,” analysts at Investec said in a note.

“USD-ZAR resistance towards 13.50 still appears to be holding for now, whilst on the flip side support towards 13.30 will help keep the pair consolidative.”

Data from Statistics South Africa showed manufacturing output grew marginally in June while contracting on a quarterly basis. The rand was unmoved by the data.

Bonds were firmer, with the yield for the benchmark bond due in 2026 down 4.5 basis points to 8.69%.

In the equities market, stocks rose in line with emerging markets to a near one-month high.

The all-share index closed 1.49% higher at 57,705 points while the benchmark top 40 index was up 1.33% to 51,578 points.

“There seems to be a bit of wholesale buying back into the likes of Naspers. The overall volumes aren’t very high which means investors are still sitting on the sidelines,” Ryan Woods, a trader at Independent Securities, said.

Naspers, which owns about 30% of the Chinese technology firm Tencent, rose 2.43%.

Steel producer Kumba Iron Ore was up nearly 3%, boosted by favourable iron ore prices which rallied as much as 6.5% to a 5-month high on Monday.