Rand slightly up after dollar loses impetus

JOHANNESBURG – South Africa’s rand was slightly stronger yesterday as a recent rally in the dollar lost steam and the Reserve Bank left its main lending rate unchanged, as expected.

At 5.50pm yesterday the rand was trading at 12.4475 against the dollar, around 0.1percent stronger than its close on Wednesday.

The rand’s gains mean it is now up almost 3percent since the end of last week, an especially strong performance given that emerging market currencies have been feeling the heat recently on global markets.

Traders said the central bank’s decision yesterday to leave its main lending rate at 6.5percent had already been priced into the market.

But they noted a more hawkish tone than the bank’s March meeting, when the Monetary Policy Committee lowered the rate by 25 basis points.

“The governor argued – rightly in our view – that risks lie to the upside,” Capital Economics analyst John Ashbourne said in a research note. “While the rand managed to dodge the dramatic falls seen elsewhere in the emerging market world this month, the currency still poses a key risk.”

On the JSE, Massmart Holdings fell the most on record after the South African food and general goods retailer controlled by Walmart said political and economic optimism in the country at the start of the year has failed to translate into improved consumer spending. Massmart closed nearly 18percent lower at R115, the biggest intra-day decline since the shares started trading in July 2000. Sales rose 0.8percent to R31.4billion in the first 19 weeks of the year.

Food company Tiger Brands said yesterday that its revenue declined 4percent to R15.7bn in the six months to March 31. Its share price fell 4.58percent to R333.29.

The company, which had to recall processed meat products at its Value Added Meat Products facilities earlier this year after they were linked to a listeriosis outbreak, said headline earnings per share were down 16percent to 868c. 

– Reuters, Bloomberg and ANA