South Africa’s rand crosses R14 threshold, stocks gain

The rand firmed below the R14.00 threshold on Wednesday for the first time in six weeks as a softer dollar boosted investor appetite for emerging markets.

On the bourse, the financial and retail sectors topped the JSE after S&P Global Ratings stable economic outlook, while miner Sibanye-Stillwater took a blow after selling shares to service debt.

At 1500 GMT the rand had strengthened 1.01% to R13.93 per dollar compared to its open of R14.09, outperforming other emerging market currencies such as the Turkish lira and the Mexican peso.

The last time the rand traded below R14.00 was on February 27.

The dollar has softened because of weak economic data, fresh global trade tensions between the United States and Europe, and the International Monetary Fund (IMF) cutting its global growth forecast.

“The carry trade for the month has been very active. There’s a lot of foreigners buying bonds in South Africa and that’s helping the rand outperform other currencies for the day,” said Treasury One chief currency dealer Wichard Cilliers.

The rand’s gains may be short-lived however with the current boost caused by mainly external factors, Cilliers said.

In equities, the Johannesburg All-Share index gained 0.73% to 58,261 points, while the Top 40 index rose 0.87% to 52,003 points.

Clothing retailer Mr Price rose 5.96% to R208.00, Shoprite was up 4.22% to R169.20, while Nedbank gained by 4.1% to R265.44. Comments from ratings firms S&P and Moody’s were good news and were keeping the equity market in positive territory, said Maudi Lentsoane, trader at Lehumo Investments.

“A stronger rand means lower inflation, which means more money for South Africans as the interest rates are not going to be high, which is positive for the retailers and the financial sector,” said Lentsoane.

On the downside, Sibanye-Stillwater declined nearly 16% to R14.29. Fellow platinum miner Lonmin, which Sibanye is looking to acquire, also took a knock, contracting R12.85 to R13.63.

“They sold [their shares] at a discount so the market is essentially pricing in that offer, and marking the shares down to around where the new shares were issued,” said Greg Katzenellenbogen, a trader at Sanlam private wealth.