Rand slips as dollar rebounds, stocks tick up

The rand slipped on Tuesday, surrendering the previous session’s gains as the dollar rebounded from a sell-off triggered by fears the United States economy is heading for recession.

Stocks closed up slightly as riskier assets showed signs of stability, while the bullion sector weighed on further gains.

The rand was 0.66% weaker at R14.40 per dollar at 1613 GMT, compared to a close of R14.31 overnight in New York.

“Market fears over the US economy heading for a recession seem to be easing and this continues to support appetite for the greenback,” FXTM analyst Lukman Otunuga said.

“The South African rand like many other emerging market currencies is likely to remain driven by external factors this week.”

On Monday, the rand gained more than 1% in a broad emerging market rally sparked by renewed fears that economic growth in developed markets was set to contract after an inversion of the US yield curve and poor manufacturing data from Germany and Japan.

Locally, with no top tier data due, investors are waiting for Thursday’s central bank monetary policy decision, and a Moody’s rating review on Friday, which is likely to be after local markets close.

A Reuters poll last week forecast the bank will leave lending rates unchanged 6.75%.

Government bonds also weakened, with the yield on benchmark 2026 paper adding 3 basis points to 8.74%.

On the bourse, the Johannesburg All-Share index ticked up 0.49% to 55,638 points and the Top 40 index was up 0.43% at 49,372 points.

Among the decliners, the gold sector fell 1.18% after spot gold prices retreated from more than three-week highs on Tuesday.

Gold Fields closing down 2.38% to R57.73 and AngloGold Ashanti 1.03% lower at R205.33.