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Rand weakens on Trump concerns, stocks mixed

The currency traded at 13.2150 per dollar by 1541 GMT, weakening 1.23% compared with its New York close 13.0550 on Tuesday, which was a three-week high.

SA Currency. Picture: Supplied.

JOHANNESBURG – The rand retreated from three-week highs on Wednesday as concerns over the fate of promised US fiscal stimulus pulled investors away from emerging currencies into safe-haven assets.

On the equities market, the blue chips index rose while the broader index gave up earlier gains, as policy uncertainty in the US forced investors to seek safe haven assets.

The rand did not benefit from a surprise rise in retail sales that boosted hopes the South African economy was set to avoid slipping into a technical recession in the first quarter of this year.

The currency traded at 13.2150 per dollar by 1541 GMT, weakening 1.23% compared with its New York close 13.0550 on Tuesday, which was a three-week high.

Rand Merchant Bank currency strategist John Cairns wrote in a note that the weaker dollar was initially great for the rand.

"But this has changed as US politics intrudes, the key concern right now being that charges of obstruction of justice could be brought against President Trump," Cairns said.

"At the very least, the political concerns could further reduce scope for the much-hoped-for yet never-seen stimulus package."

Media reports have raised questions over whether obstruction of justice charges could be laid against US President Donald Trump, after he asked then-FBI Director James Comey to end the agency's investigation into ties between former White House national security adviser Michael Flynn and Russia.

Government bonds also weakened, with the yield for the benchmark paper due in 2026 rising 6 basis points to 8.685%.

Stocks also fell on the political uncertainty in the US.

"A lot of people are not so happy about some decisions being made by Donald Trump, so there is still a lot of uncertainty around him and his policies," said trader at Global Trader Paul Chakaduka.

Naspers rose 2% to R2,725. Tencent Holdings, in which Naspers holds a major stake, said first-quarter net profit rose 58%, buying the South African firm's stock.

AngloGold Ashanti led the blue chip higher, after it gained 5.67% to R156.99 after gold rose to its highest in two weeks, partly on political turmoil in the US.

The benchmark Top-40 index closed 0.16% higher at 47,504 points, while the All-share index inched down 0.04% to 54,001 points, as Exxaro slid 4.8%.

Construction firm Aveng fell 7.31% to 5.20 rand after flagging lower full-year earnings.

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