Rand hits near 6-week best as dollar falls, stocks down

The rand firmed on Tuesday, supported by a retreating dollar, which was shackled by a combination of weak US economic data and gains in commodity-linked currencies.

At 1501 GMT the rand was 0.73% firmer at R14.02 per dollar, after touching a near six-week best of R14.01 earlier in the session.

The dollar slipped against a basket of rival major currencies, its second day of losses.

BNP Paribas South Africa senior economist Jeff Schultz said easing concerns about the US-China trade tensions and fewer concerns over a global economic slowdown had played a part in current rand gains.

“All of that has prompted a slightly more optimistic, or risk-on appetite for global investors and that is obviously helping the emerging market currencies like the rand,” Schultz said.

With interest rates steady and inflation moderate, the currency offers one of the most attractive spreads to US dollar and other low yield currencies, making it a target for carry traders.

Mining and manufacturing production figures on Thursday are the main data points locally, while investors will also have an eye on the tariff dispute between Washington and Beijing.

Bonds also firmed, with the yield on the benchmark 10-year bond down 2 basis points to 8.495%.

In stocks, the Johannesburg All-share index slipped 0.25% to 57,838 points, while the Top 40 index fell 0.27% to 51,564 points.

Trader Ryan Woods, of Independent Securities, however pointed out that gold stocks at least were looking “a little better”, with the underlying price up half a percent.

AngloGold Ashanti, for instance, rose by 0.87% to R195.28. Other miners however dragged the index down, with South32 falling 4.19% and AccelorMittal down 3.9%.

But Woods said there was little remarkable about the stock market on Tuesday, with investors largely in wait-and-see mode ahead of South Africa’s national election.

“It’s very much a non-event, you almost get the impression that the market is sitting and waiting, and that’s going to be the case until May 8,” said Woods.