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#RandReport: Rand snaps 3-day losing streak, stocks down

The rand firmed on Thursday, snapping a three-day losing streak, helped by some investors taking profits from the dollar’s recent rally.

FILE: Picture: Christa Eybers/EWN.

JOHANNESBURG - South Africa’s rand firmed on Thursday, snapping a three-day losing streak, helped by some investors taking profits from the dollar’s recent rally and short covering triggered by the currency approaching technical support levels.

Stocks fell led by Harmony Gold which weakened after it said it may consider a rights issue to repay a loan.

At 15.27 GMT the rand was 0.5% firmer at 13.5100 per dollar compared to Wednesday’s close of 13.5775 in New York.

A combination of a firmer dollar, higher-than-expected inflation print and negative sentiment spurred by recent Cabinet changes had pushed the rand to its weakest in nearly a week towards short-term technical support around the 13.60 mark.

Traders bearish on the local currency and betting on further weakens took the opportunity to “buy the dip” with a view of selling again at the next support level at 13.85.

The rand has been volatile in recent weeks, driven by fluctuation in market expectations of US rate hikes and domestic political uncertainty.

Investec economist Annabel Bishop said investors appetite from riskier but high-yielding assets had cushioned the rand from further weakness.

“Emerging markets have seen strong foreign portfolio inflows in the current period of global risk-on,” Bishop wrote in a note. “This prevented the rand from seeing the additional weakness that would normally be warranted given the high level of political uncertainty.”

Traders are now looking ahead to the medium-term budget policy statement on 25 October.

Economists polled by Reuters expect Finance Minister Malusi Gigaba to announce a revenue shortfall of R40 billion due to poor tax receipts, likely pushing the budget deficit to 3.9% of GDP from 3.4% estimate.

In fixed income, the yield on the benchmark government bond due in 2026 closed up 2.5 basis points at 8.795%.

On the bourse, the benchmark Top-40 index fell 0.43% to 51,526 points while the All-Share index lowered 0.44% to 57,897 points.

Among the biggest fallers, Harmony Gold was down 3.12% to R22.68 by close of day after dropping to more than two month lows early in the session after it said it might consider a rights issue of new stock to repay a loan it will use to finance the purchase of Anglo Gold Ashanti’s Moab Khotsong mine.

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