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Rand hits 16-month high vs dollar

The rand kicked off local trade on the front foot as the dollar came under pressure after the resignation of Michael Flynn.

Picture: Supplied.

JOHANNESBURG - The rand touched a 16-month high against the dollar early on Wednesday on improved risk appetite, with investors eyeing a batch of domestic and US economic data due out later in the day for fresh catalysts.

Stocks were weaker, as the main bourse was dragged lower by miner Kumba Iron Ore after the company said it was still not in a position to pay shareholders a dividend despite seeing a doubling in earnings.

"It's really a technical move and a continuation of recent momentum. There's been pressure for a while on the dollar/rand to break lower and now it's happened," said Jim Bryson, currency trader at Rand Merchant Bank.

The rand kicked off local trade on the front foot as the dollar came under pressure after the resignation of US National Security Adviser Michael Flynn. It made further gains as South Africa's unemployment rate pulled back from its highest in 13 years.

Technical and momentum indicators point to the rand extending the rally after struggling to break short-term resistance around 13.40 for the past two weeks, although it remains vulnerable to swings in global sentiment.

A Reuters poll of 39 strategists last week saw the rand weakening around 8% in 2016 as the government struggles to keep public spending down, and as rates are expected to rise in the United States.

On the bourse, the benchmark Top-40 index fell 1.1% to 45,437 points while the All-Share index dropped 0.93% to 52,957 points.

Kumba Iron Ore, a unit of Anglo American, fell 7.16% by the close after announcing it would hold off on paying a dividend because of a volatile market outlook.

"The market doesn't like that because it means there's nothing in it for them for the next six months to a year," Independent Securities trader Ryan Woods said.

Among the biggest fallers were Northam Platinum which tumbled 5.88% to R51.06, ArcelorMittal which fell 3.17% to 13.75% and Impala Platinum which dropped 2.97% to R52.89.

In fixed income, bonds were firmer with the yield on the benchmark government issue due in 2026 shedding 10.5 basis points to 8.625%.

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