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#RandReport: Rand gains on rate hike, global sentiment; stocks rise

The South African Reserve Bank pushed up rates on Thursday in a bid to stem inflation.

The rand gained 1.85 percent to 15.9200 per dollar by 1556 GMT. Picture: EWN

JOHANNESBURG - The rand firmed on Friday to trade below the psychological level of 16.00 to the dollar for the first time since 7 January, buoyed by a central bank rate hike and improved global risk sentiment.

On the equities market, stocks ended slightly higher with banks among the biggest gainers on views that the sector has strayed into an oversold territory.

The rand gained 1.85 percent to 15.9200 per dollar by 1556 GMT, breaching a barrier that traders say could help the currency firm further.

"It's a combination of improved global risk sentiment, and the currency also received an additional boost from the 50 basis point interest rate increase yesterday," said ETM Analytics economist Jana van Deventer.

The South African Reserve Bank pushed up rates on Thursday in a bid to stem inflation after the rand fell by nearly 14 percent since December.

A shock decision by the Bank of Japan to cut interest rates sparked a rally in emerging markets, fostering demand for high-yielding assets.

South African bonds were mixed, with the benchmark paper due in 2026 shedding 0.5 basis point to 9.205 percent.

On the bourse, traders took their cue from an upbeat tone in major overseas markets.

The Johannesburg Stock Exchange's (JSE) Top-40 index gained 0.73 percent to 44,065 and the All-share index added 0.9 percent to 49,141.

The banking index rose 5 percent with Capitec Bank the biggest gainer, surging 6 percent to R481.00.

The nation's biggest bank by market value FirstRand was up 3.8 percent to R44.72 and rival Standard Bank added 4.87 percent to R112.21.

"People are starting to think it is not all doom and gloom in South Africa," said Momentum Wealth's portfolio manager Wayne McCurrie, adding that the sector was undervalued.

Traders said the central bank's decision to increase interest rates by half a percentage point invited buyers into the sector, which has struggled to recover from last month's hefty losses triggered by President Jacob Zuma's decision to change finance ministers twice in one week.

Trade was active with more than 339 million shares changing hands, above last year's daily average of 296 million shares.