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#RandReport: Rand firms on rate hold, dollar ebbs

The central bank left its benchmark repo rate at 6.5% on Thursday, with the bank’s governor striking a more hawkish note than at the last rate meeting in July.

FILE: Picture: Supplied.

JOHANNESBURG - The rand firmed to a three-week high against the dollar on Thursday after the central bank left its benchmark repo rate unchanged and the US currency slipped to its lowest since July.

Equities rose for the third session in line with global markets that continued to shrug off lingering concerns over the US-China trade war.

The rand was trading at 14.4275 per dollar at 15.42 GMT, up 1.47% from Wednesday’s close and its strongest since 30 August.

The central bank left its benchmark repo rate at 6.5% on Thursday, with the bank’s governor striking a more hawkish note than at the last rate meeting in July.

“We think that the pressure for a rate hike that has been welling up in recent months will soon ebb,” said Capital Economics’ senior emerging markets economist John Ashbourne.

“The big falls in the rand are now probably behind us. Indeed, the currency has rebounded since reaching a low point in early September.”

President Cyril Ramaphosa will on Friday detail a stimulus package meant to reignite growth, with the economy having shrunk 0.7% in the second quarter, unexpectedly tipping the country into its first recession since 2009.

The dollar slipped to its lowest levels since 9 July on concern over the impact of the trade row between China and the United States.

In fixed income, the yield on the benchmark government bond due in 2026 was flat at 9.09%.

On the stock exchange, the blue-chip Top-40 index was 0.25% firmer at 50,397 points while the all share index was up 0.18% at 56,547 points.

A bounce in global stocks on relief that fresh US and Chinese tariffs on reciprocal imports were less harsh than feared continued on Thursday, though investors remained wary about the next steps in the trade war.

Aspen Pharmacare ended a five-day losing streak, rising 2.3% after shares slumped on investor concerns about the sale of its baby food unit to France’s Lactalis and concerns over its debt levels.

“Today’s (Aspen Pharmacare) rebound is the market saying that yesterday’s sell-off was probably overdone a bit,” said Michael Treherne, portfolio manager at Vestact.

“For the short term, I don’t see the share price recovering to where it was before last week. The market is a bit more cautious because of their debt levels.”

Telecoms giant MTN closed with a 6.5% gain after Nigeria’s central bank said on Wednesday that it was reviewing the information provided by the company and four banks about a dispute on the repatriation of dividends.

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