Rand flat as vaccine optimism wavers

The rand was mostly unchanged against the dollar on Thursday as global market optimism over a potential Covid-19 vaccine wavered on concerns over logistics, while the country’s record unemployment rate weighed on stocks.

The rand traded at R15.62 against the US dollar at 1529 GMT, 0.08% firmer than it closed on Wednesday.

The rand is seen as a proxy for emerging market risk and is highly susceptible to swings in global market sentiment.

The market was further dampened by local data releases, with South Africa’s unemployment rate at a record high of 30.8% in the third quarter and mining output contracting 2.8% in September.

Investors are looking for clues about the health of Africa’s most industrialised economy, which is forecast to contract by at least 7% this year because of the pandemic.

In fixed income, the yield on the 2030 bond was flat at 6.955%.

The unemployment figures also hurt stocks, with the benchmark All-Share Index ending the day 1% lower at 57,031 points and blue-chip Top 40 Index closing down 0.85% at 52,335 points.

“Initially, we thought with President Ramaphosa’s easing of the lockdown regulations it would have given the market a boost. However, with the unemployment numbers coming out later in the day, it then pulled the market negatively,” said Greg Davis, a trader at Cratos Capital.

President Cyril Ramaphosa said in a televised address on Wednesday that the country would open up travel to all countries in an effort to boost the battered tourism and hospitality sectors.

Shares in banks, whose lending businesses suffer when borrowers lose their jobs, fell from highs seen earlier in the week. The banking index was down 1.8% to 67,14 points.