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#RandReport: Rand extends slide on firmer dollar, stocks fall

The dollar index extended its gains on Tuesday as pessimism about the United States remaining in the Iran nuclear deal spurred safe-haven demand for the greenback.

FILE: Picture: EWN.

JOHANNESBURG - South Africa’s rand fell for a second straight session on Tuesday, tracking other emerging market currencies as the dollar index surged to a new 2018 high ahead of US President Donald Trump’s verdict on the Iran nuclear deal.

At 15.07 GMT, the rand traded at 12.6400 per dollar, 0.76% weaker than its close on Monday.

The dollar index extended its gains on Tuesday as pessimism about the United States remaining in the Iran nuclear deal spurred safe-haven demand for the greenback.

Trump is expected to make an announcement on the nuclear deal at 18.00 GMT. A US withdrawal from the agreement, which eased economic sanctions in exchange for Tehran limiting its nuclear programme, would impact risk sentiment in the broader markets.

Investec chief economist Annabel Bishop wrote in a note that the rand remained volatile, with risk for further weakness as the dollar rises.

“However, the rand benefits from stronger commodity prices, with the commodity rally also unlikely to be over yet. Rand volatility is likely to remain a feature for South Africa,” Bishop said.

In fixed income, the yield on the benchmark government bond due in 2026 rose 7 basis points to 8.39%, reflecting weaker prices.

On the bourse, the Johannesburg all-share index was 0.52% weaker at 57,578 points while the benchmark top 40 index fell 0.29% to 51,002 points.

“People are waiting for Donald Trump’s announcement tonight to see how the markets will react. Gold is down and platinum is also down. The commodities are all a bit low,” said Greg Davies, equities trader at Cratos Capital.

Impala Platinum was down 7.56% to R19.80, while Royal Bafokeng fell 4.80% to R22.61. The gold mining index fell 0.99% to 1,077 points.