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#RandReport: Rand strengthens, commodity gains lift stocks

At 1500 GMT the rand was 0.42% firmer at R11.9350 against the US dollar, a touch softer than the session-best R11.9275 but its strongest in a week.

Picture: EWN

JOHANNESBURG - South Africa’s rand strengthened and bonds rallied on Wednesday after better than expected inflation and retail data reactivated investor optimism that has bolstered the currency this year.

Stocks ended higher, led by heavily weighted mining shares as commodity prices forged ahead.

At 1500 GMT the rand was 0.42% firmer at R11.9350 against the US dollar, a touch softer than the session-best R11.9275 but its strongest in a week, as investors cheered the March inflation figure sliding to its lowest in seven years on falling food prices.

The rand has strengthened by about 20% against the dollar since November when Cyril Ramaphosa won the race to lead the ruling African National Congress en route to his election as South Africa’s president in February.

The yield on the benchmark government bond due in 2026 fell 5.5 basis points to 8.025%, its lowest since 5 April.

Lower inflation boosts demand for bonds because investors believe their investment will be worth more in the future.

Headline annual consumer inflation slowed to 3.8% in March from 4% in February, the lowest level since January 2011, Statistics South Africa said. Month-on-month inflation slowed to 0.4% from 0.8%.

Retail sales rose 4.9% year on year in February.

Ramaphosa said on Wednesday that the rand is almost back at its natural level.

Analysts said that while the lower CPI was good for the economy overall, the central bank is now less likely to raise interest rates.

The JSE All-share index, the broadest measure of stock market performance, was up 1.56% at 57,713 and the benchmark Top-40 index rose 1.69% to 51,025.

Mining giants Anglo American and BHP Billiton were among the top gainers, rising 5.2% and 3.8%, respectively.

Metals such as nickel and aluminium were in demand on the London Metal Exchange on a combination of technical factors and supply concerns because of US sanction against Russia.

On the downside, Rebosis slumped 8% after the property fund said its chief executive had quit and pushed back its half-year results.