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#RandReport: Rand weakens on Fed hike fears, retail stocks fall

At 1500 GMT, the rand traded at 13.0825 per dollar, 0.87% weaker from its New York close on Tuesday.

Picture: EWN.

JOHANNESBURG – The rand weakened on Wednesday as the dollar was boosted by bumper US private-sector jobs numbers that raised already high expectations of a US interest rate hike next week.

Local data showing business confidence declined in February also weighed on sentiment.

At 1500 GMT, the rand traded at 13.0825 per dollar, 0.87% weaker from its New York close on Tuesday.

Investors have also retreated to the sidelines before Friday's US jobs data which may offer more clues as to the pace of monetary tightening by the Federal Reserve.

On the equity market, stocks were slightly lower and were set to end the week on a sour note, hit by a weak domestic economy and stalling commodity prices.

The benchmark JSE Top-40 index inched down 0.03% at 44,326 and the broader All-share index dipped 0.15% to 51,299.

Jitters over gross domestic production data, which showed the economy contracted 0.3% in the final three months of 2016, put pressure on retail stocks which depend on buoyant growth and higher consumer spending.

Fashion chain Truworths International fell 6.92% to R84.25, while retailer Woolworths Holdings declined 3.86% to R69.99.

Government bonds also weakened, and the yield for the benchmark instrument due in 2026 rose 1 basis point to 8.66%.

"South Africa has now seemingly fallen into a low-growth trap, where consecutive years of low economic growth result in a vicious cycle of continuous shortfalls in tax revenue, stagnant employment opportunities, and deteriorating confidence levels," said analysts at NKC African Economics in a note.

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