#RandReport: Rand firms as improving outlook spurs bull, stocks flat

At 1530 GMT the rand was 0.42% firmer at 11.9975 per dollar compared to a close of 12.0475 overnight in New York.

Picture: Pixabay.com.

JOHANNESBURG - South Africa’s rand gained on Tuesday to below the crucial 12 per US dollar level as rand bulls were encouraged the announcement of an investment drive by President Cyril Ramaphosa and an improving economic outlook.

Stocks were barely changed as the bullion sector weighed on the bourse.

At 1530 GMT the rand was 0.42% firmer at 11.9975 per dollar compared to a close of 12.0475 overnight in New York, finding some breathing space along with other emerging currencies despite the greenback recouping some losses.

Like other emerging market currencies, the rand has been hit by risk-off sentiment sparked by fears of US-China trade war and developments in Syria, but on Tuesday also found support from data showing China’s economy grew slightly faster than expected at 6.8% in the first quarter.

“The rand performance has raised a few eyebrows. For a currency that usually is quite volatile it has been reasonably stable. This rally isn’t due to domestic factors alone,” said ETM Analytics economist Halen Bothma.

“Ramaphosa’s investment initiative has encouraged some rand bulls. It’s improved the mood on the outlook side. It looks like the wheels on the political side are starting to turn and the rubber is hitting the road.”

On Monday Ramaphosa appointed a team of business and finance experts to seek out $100 billion in investment to boost the ailing economy, and on Tuesday the IMF raised its 2018 growth forecast for South Africa to 1.5%.

Bonds were flat, with the yield on the benchmark 2026 paper steady at 8.08%.

On the bourse, the benchmark Top-40 index barely changed up 0.11% to 50,176 points while the All-Share index ticked up 0.16% to 56,827 points.

Bullion producer stocks fell 2.99% weighed down by a strengthening rand and a lower by gold spot price.

“It’s a consolidated market, with gold shares under pressure from the currency play strengthening,” said FFO Securities portfolio manager Wilmar Buys.

Biggest decliners in gold were AngloGold down 3.44% to 107.81 and Sibanye Gold also fell 5.61% to R10.10.