#RandReport: Rand recovers, helped by higher commodity prices

The rand was expected to remain in a narrow range as investors awaited more clues on SA’s rating.

Picture: Christa Eybers/EWN

JOHANNESBURG - The rand's firmed on Tuesday helped by a recovery in commodity prices and as the dollar's recent rally on expectations the United States (US) interest rates could rise next month took a breather.

Stocks slipped, hit in part by technical factors after the 14-day RSI of the main indices - a momentum indicator tracked by analysts - strayed into overbought territory, suggesting a pull-back was on the cards after a strong rally.

At 1545 GMT, the rand traded at 15.7455 per dollar, 0.43 percent firmer from its New York close on Monday.

"The dollar has been slightly weaker on global markets and we have seen a consolidation on commodity currencies, gold is up, platinum is up, that's why the rand is looking a little bit better," Bidvest Bank chief dealer Ion de Vleeschauwer said.

"But we are still very much in the ranges between 15.7500 and 15.8500."

The rand was expected to remain in a narrow range as investors awaited more clues about the timing of an interest rate hike in the United States and a possible downgrade to South Africa's rating at the end of the week.

Ratings firm Standard & Poor's was due to review South Africa's credit rating, currently one notch above subinvestment, on Friday.

A recent Reuters poll found that S&P and Fitch, also expected to decide on the sovereign rating in June, would cut South Africa to "junk" status in 2016.

Meanwhile, the dollar has risen recently on expectations of higher US rates. Fed Chair Janet Yellen said on Friday that the central bank should hike rates "in the coming months" if economic growth picks up and the labour market continues to improve.

On the stock market, the benchmark Top-40 index shed 0.98 percent to 47,974 while the wider All-share index finished the session 1.04 percent lower at 53,905.

The biggest decliner on the day was iron ore producer Assore , which fell 8.5 percent to 160.10 rand.

Chinese steel and iron ore futures posted their sharpest monthly falls on record in May on weaker seasonal demand, a renewal of bad news for the sector after a rebound fuelled by glimmers of optimism over the Chinese economy.

Government bonds were mixed, and the yield for the benchmark instrument due in 2026 shed 0.5 basis points to 9.385 percent.