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#RandReport: Rand firms at 2-1/2-year high, stock up

At 15:18 GMT, the rand traded at R11.9450 per dollar, up 0.75% from its New York close on Tuesday.

Picture: EWN.

JOHANNESBURG - South Africa’s rand firmed against the dollar on Wednesday, breaking through 12 per dollar for the first time since mid-2015, supported by a weaker greenback and expectations the new leader of the ruling African National Congress (ANC) would rejuvenate the economy.

At 15:18 GMT, the rand traded at R11.9450 per dollar, up 0.75% from its New York close on Tuesday.

The rand is trading at its best levels against the dollar since July 2015, according to Thomson Reuters data.

The South African currency has surged since Cyril Ramaphosa won the race to succeed Jacob Zuma as ANC leader last month, putting him in pole position to become the country’s next president.

Ramaphosa has pledged to fight corruption and woo foreign investment. He is the country’s deputy president and would become the nation’s leader if he wins an election next year when Zuma is due to step down.

“The rand convincingly pierced the R12.00/USD key resistance level today, reaching R11.92/USD as the US dollar weakened on US economic policy concerns, with the greenback reaching around three-year lows, following also ongoing revelations on US political issues,” said Investec chief economist Annabel Bishop.

“Positive comments from SA officials in Davos on SA about ending corruption, repairing SOE governance and the health of public finances, maintaining key institutional strengths and promoting economic growth have also assisted in the lift in the domestic currency.

In fixed income, the yield for the benchmark government bond was down 1 basis points to 8.365%.

Stocks also benefited from positive sentiment from Ramaphosa despite heavy-weight Naspers weighing on further gains.

On the bourse, the benchmark Top-40 index ticked up 0.1% to 54,576 points while the All-Share index lifted 0.24% to 61,623 points.

“We are seeing financials in particular and the likes of some of the industrials and retailers looking good,” said Independent Securities trader Ryan Woods.

PSG Group rose 5.69% to R276.90, Lewis lifted 5.03% to R30.04, and Massmart Holdings gained 3.34% to R149.18.
Further gains were curbed by rand hedge Naspers which fell 1% to R3710.03 amid a strong rand.

Rand-hedged stocks, which make the bulk of their revenue outside South Africa, tend to weaken as the currency strengthens.