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#RandReport: Wider than expected trade surplus boosts rand, stocks up

The rand swung from a session low of 14.9750/dollar to a high of 14.6000.

Picture: Christa Eybers/EWN

JOHANNESBURG - The rand reversed earlier losses against the dollar, gaining as much as 1 percent after trade data showed the widest trade surplus since 2010.

Stocks ended a volatile quarter with modest gains, extending a rebound in the aftermath of last week's vote by Britain to exit the European Union to a third straight session.

The rand swung from a session low of 14.9750/dollar to a high of 14.6000 after the revenue service reported a bigger-than-expected trade surplus of 18.73 billion rand in May, after April's 127 million rand shortfall.

By 1550 GMT the currency was at 14.7375/dollar, up 0.3 percent from Wednesday's close at 14.7850.

It was 0.6 percent firmer versus the euro and up 1.6 percent against sterling, which is still suffering the fallout from last week's vote by Britain to leave the European Union (Brexit).

Thursday's trade data augurs well for South Africa's current account, which has traditionally been a source of vulnerability for the rand and widened to 5 percent of GDP in the first quarter of the year.

"Recent trends suggest a much lower current account deficit than the consensus is forecasting, which could help support the rand," Nedbank analysts Isaac Matshego and Dennis Dykes said in a note.

Government bonds tracked the firmer rand, with the yield on the benchmark 2026 issue dipping 1 basis point to 8.83 percent.

On the bourse, the Top-40 index gained 0.53 percent to 45,0974, although it was down 0.35 percent for the quarter, reflecting a heavy global sell-off in stocks over Brexit. The broader All-share index added 0.63 percent on the day to 52,217.

"From a volatility perspective things seem to be a little bit calmer as people digest what's going on at the moment," said Global Trader head of trading Nilan Morar.

"It is month end, quarter end and half year end today so we anticipated a bit of volume going through and perhaps a bit of strength in the undertone of the market."

Mining stocks were among the gainers as industrial metal prices such as copper, zinc and iron ore cruised higher. Anglo American added 1.77 percent to 141 rand and Kumba Iron Ore jumped 7.24 percent to 111 rand.

Gold stocks however retreated from recent gains which have been spurred by a firmer bullion price. Gold Fields was down 0.13 percent at 71.27 rand and rival AngloGold Ashanti pulled back 0.39 percent to 267.59 rand.

Trading volumes were low with 272 million shares changing hands, below last year's daily average of 296 million shares.