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#RandReport: Rand firmer ahead of rates decision, stocks rise

Bonds were firmer tracking the currency, with the benchmark 2026 paper ending the session at 9.605%.

Picture: Reinart Toerien/EWN.

JOHANNESBURG - The rand eked out gains in volatile trade on Wednesday ahead of a policy decision where the central bank is expected to lift interest rates as it looks to curb climbing inflation.

Stocks on the Johannesburg Stock Exchange (JSE) closed firmer on the day, led higher by clothing retailers Truworths and Mr Price.

By 1545 GMT the rand had strengthened 0.24 percent to 16.3800, tracking emerging currencies firmer on bets that the US Federal Reserve would strike a cautious tone when it decides on interest rates later in the session.

Increasing signs of weakness in China's economy have fuelled bets that the Fed could proceed with only one increase later this year.

Bonds were firmer tracking the currency, with the benchmark 2026 paper ending the session at 9.605 percent.

Beyond the Fed decision the rand would be driven by the South African Reserve Bank's policy decision on Thursday, traders said, where the bank is expected to lift benchmark rates by 50 basis points to 6.75 percent.

A hike of less than 50 basis points is expected by traders and analysts to put the rand under pressure.

"It's going to be a difficult year for the bank in the year ahead. We are certainly looking at at least a 100 basis point increase, or even 125, this the year," said economist at Credit Guarantee Insurance Luke Doig.

On the bourse, the blue chip Top 40 index gained 0.73 percent 42,939 points, while the All Share Index was up by 0.82 percent to 47,924 points.

South African clothing retailer Truworths Holdings shares jumped more than 3.65 percent to 92.49 rand after the group said it expects half year headline earnings per share to increase by between 19 and 23 percent.

Rival apparel retailer Mr Price Group also gained 2.28 percent to R148.56.

Energy company Sasol was up 1.08 percent at R406.24, lifted by an uptick in oil prices.

On the flip side, platinum producer Anglo American Platinum fell 4.45 percent to 200 rand as concerns over slowing demand from resources guzzler China weighed on markets.

Investment firm PSG Group dropped 2.83 percent to R176.85 after its subsidiary Curro Holdings said annual headline earnings would be up by 29 cents at most, shy of market expectations.

Trade on the bourse was lively as advancers outpaced decliners, with a total of 258 million shares changing hands.