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#RandReport: Rand weaker, stocks boosted by retail data

At 14:30 GMT the rand was 0.26% weaker at R12.3025 per dollar compared to its close overnight in New York.

Picture: Supplied.

JOHANNESBURG - South Africa’s rand weakened on Wednesday, giving back gains that lifted it to its firmest level in 2-1/2 years as caution crept back into the market and some investors held off extending long positions.

The stock market was boosted by retail data and extended the previous session’s rally. Bonds were weaker, with the yield on the benchmark paper due in 2026 adding 1 basis point to 8.485%.

At 1430 GMT the rand was 0.26% weaker at R12.3025 per dollar compared to its close overnight in New York, although it pared some losses to R12.2875/$ after retail sales data for November showed its largest increase in five years.

The Reserve Bank decides on lending rates on Thursday, with economists forecasting rates unchanged at 6.75% but forward markets pricing a slightly more than 50% chance of a cut by 25 basis points.

“Notwithstanding the positive retail sales surprise, growth is still weak, below potential. This is reason enough for the Sarb to lend some near-term support to growth, and cut the repo rate in January,” said Razia Khan, chief economist for Africa at Standard Chartered.

The Johannesburg All-share index reached a record high of 61,309 points in mid-day trade before paring gains to close 0.45% higher at 60,924 points. The Top-40 index climbed 0.54% to 54,068 points.

The signs of better than expected economic recovery cheered retail stocks.

Supermarket chain Choppies rose 7.14% to R3.30, food retailer Shoprite rose 4.99% to R230.97, and Wal-Mart’s South African unit Massmart jumped 4.49% to R136.60.

“Today’s figures suggest that consumer spending will make a strong contribution to economic growth in the fourth quarter,” said Nedbank Group economic analysts in a note referring to the retail sales numbers.