Rand weakens as markets digest economic recovery plan

The rand weakened on Thursday, as market participants digested an economic recovery plan focusing on infrastructure investment and job creation unveiled by President Cyril Ramaphosa.

At 1545 GMT the rand was trading at R16.66 versus the US dollar, 0.73% weaker than its previous close.


Subscribe for full access to all our share and unit trust data tools, our award-winning articles, and support quality journalism in the process.

ONLY R63pm

Ramaphosa said South Africa will embark on a massive public works and job-creation drive in response to the coronavirus crisis to return Africa’s most industrialised economy to growth.

“The lack of information on where the funding will come from means that we will have to wait for the MTBPS (medium term budget policy statement) to see how committed broader government is to Mr Ramaphosa’s vision,” Jacques Nel, an analyst at NKC African Economics said in a note.

Demand for the rand in recent months has been partly supported by the still high yield on offer on local assets despite the central bank cutting lending rates to a record low.

But analysts have warned that these “hot money” flows would dry up without implementation of a credible plan for economic growth.

On the bourse, stocks fell along with global markets, with the benchmark Top 40 index down 1.05% to 50,504 points and the All-Share index closing 0.98% lower at 54,854 points.

Gold shares shed 1.74% after the bullion price weakened as hopes faded for a US fiscal stimulus package before the presidential election.

AngloGold Ashanti closed down 2.49% at R452.30 and Harmony Gold dropped 1.68% to R96.85.

Among the fallers, bourse heavyweight Naspers weakened 1.53% to R3,094.75 after losses in Hong Kong technology giant Tencent, in which it has a stake.

Bonds firmed, with the yield on the benchmark government issue due in 2030 down 1.5 basis points to 9.415%.

Source: moneyweb.co.za