#RandReport: Rand slightly stronger as Reserve Bank holds rates

The rand’s gains mean it is now up almost 3% since the end of last week.

FILE: Picture: EWN.

JOHANNESBURG - South Africa’s rand was slightly stronger on Thursday as a recent rally in the dollar lost steam and the Reserve Bank left its main lending rate unchanged, as expected.

At 15.50 GMT, the rand was trading at 12.4475 against the dollar, around 0.1% stronger than its close on Wednesday.

The rand’s gains mean it is now up almost 3% since the end of last week, an especially strong performance given that emerging market currencies have been feeling the heat recently on global markets.

Traders said the central bank’s decision on Thursday to leave its main lending rate at 6.5% had already been priced into the market. But they noted a more hawkish tone than the bank’s March meeting when the Monetary Policy Committee lowered the rate by 25 basis points.

“The governor argued – rightly in our view – that risks lie to the upside,” Capital Economics analyst John Ashbourne said in a research note. “While the rand managed to dodge the dramatic falls seen elsewhere in the emerging market world this month, the currency still poses a key risk.”

Local bonds were also firmer on Thursday, with the yield on the benchmark government instrument due in 2026 6 basis points lower at 8.46%.

Stocks fell, led by retailer Massmart, whose shares lost around 18% after the Wal-Mart unit reported sluggish sales growth and said a head office move and restructuring would cost R116 million.

“Whilst the positive impact of South Africa’s political renewal has been good for business confidence, there is little sign currently of any economic recovery amongst our lower and middle-income consumers,” the company said in a trading statement.

Massmart shares fell to R115, its lowest level since December, according to Thomson Reuters data.

The benchmark Top-40 index closed 0.5% lower at 50,345.50, while the wider All-share index shed 0.6% to end the session at 56,699.20.