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#RandReport: Rand softer after US Fed’s minutes; stocks fall

Stocks weakened for a third session, in line with emerging markets, which were hampered by Chinese stocks tumbling to four-year lows.

FILE: Picture: Christa Eybers/EWN.

JOHANNESBURG - South Africa’s rand retreated on Thursday as minutes from the US Federal Reserve’s September meeting striking a hawkish tone bolstered the dollar and dampened some of the enthusiasm for emerging currencies.

Stocks weakened for a third session, in line with emerging markets, which were hampered by Chinese stocks tumbling to four-year lows.

At 15.46 GMT the rand was 0.93% weaker at 14.3850 per dollar after rising to 14.1050 on Wednesday, its best since 1 October.

The minutes from the meeting showed every Fed policymaker backed raising interest rates, pushing the dollar index to its firmest in a week and knocking emerging currencies that had befitted from a return of carry trade action.

“The rand has looked past local data of late and is just tracking the other emerging market currencies. You would have thought that the weaker mining numbers would have had a bigger effect,” said Jan Sluis-Cremer, forex trader at Rand Merchant Bank.

Mining production figures released on Thursday morning showed that total mining output had fallen 9.1% year-on-year in August, worse than consensus expectations of a 4.0% contraction.

The yield on the benchmark 2026 paper was flat at 9.165%.

In equities, the all share index and the blue-chip top 40 index were both down 0.49% at 52,133 points and 45,936 points respectively.

Banks fell 0.46% and bourse heavyweight Naspers was 1.17% lower at R2,725.

The emerging-market shares fell as Chinese stocks tumbled to four-year lows. The US is leaning on import tariffs to try to cut a trade deficit with China.

“With talk of raising rates with the Fed and trade wars still hanging over everyone’s head, emerging markets are still not exactly the flavour of the month. The risk-off sentiment and volatility persist,” said Ryan Woods, an equities trader at Independent securities.

Private hospital group Mediclinic extended its previous day’s losses, dropping by a further 7.80% to R68.19 after it flagged an 8% drop in core profit for the first six months of the year. On Wednesday, Mediclinic’s shares fell 19%.

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