Rand weakens as dollar rises, stocks recover

The rand fell against the dollar on Wednesday as the greenback rose broadly after trade-related worries eased amid a slight softening of the US administration’s approach to Chinese investment.

At 15:26 GMT, the rand traded at 13.81 per dollar, 1.96% weaker than its close on Tuesday.

US President Donald Trump said on Wednesday he would use a strengthened security review process to deal with threats from Chinese investments to acquire US technologies, instead of imposing China-specific restrictions.

The yield on the benchmark government bond due in 2026 rose two basis points to 8.9%. The yield had risen to 9.24% last week, its highest since December.

Rand Merchant Bank fixed income analyst Gordon Kerr said local bonds held up well despite the risk-off environment.

“It remains to be seen if we can push lower from here. Investors don’t seem to be in a real rush to buy. But that will change if USD/ZAR manages to break through 13.10,” Kerr said in a note. “Given how bid the dollar is at the moment, it does seem like the market still favours the top side.”

Data from the Johannesburg Stock Exchange showed foreign investors sold R34.7 billion worth of South African bonds between January and June, the highest sell-off on record.

Read: Offshore investors in record sale of South African bonds

On the bourse, stocks lifted after two consecutive negative sessions led by bourse heavy-weight and rand-hedge Naspers.

The benchmark Top 40 index was up 0.39% to 49,329 points, while the all share index was up to 0.21% to 55,369 points.

“The all-share was down 1.5% and now we see the market up …predominately driven by Naspers,” said Grant Gilbert, portfolio manager at Nedbank Private Wealth.

Naspers, which owns about 30% of the Chinese technology firm Tencent, closed up 2.57% to R3177.99.

Rand-hedged stocks, which make the bulk of their revenue outside South Africa and tend to strengthen as the currency weakens.

($1 = 13.7130 rand)