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#RandReport: Rand lifted by dovish Fed comments, stocks fall

At 1453 GMT, the rand was trading at 13.6250 per dollar, 1.16% firmer than its New York close of 13.7850.

Picture: Supplied.

JOHANNESBURG - The rand firmed against a softer dollar on Thursday, in line with emerging markets and a fall in bond yields, as dovish comments from US Federal Reserve Chairman Jerome Powell boosted demand for riskier assets.

Stocks were weighed down by market heavyweight Naspers and losses in so-called rand hedges - dual-listed shares that normally benefit when the rand weakens.

At 1453 GMT, the rand was trading at 13.6250 per dollar, 1.16% firmer than its New York close of 13.7850. The currency touched an intraday best of 13.6100.

“The rand’s robust performance has a lot to do with what the Fed Chairman said yesterday in regards to the hiking cycle, which opened the door for risk sentiment, as the stance was less hawkish,” said ETM economist Halen Bothma.

Comments from Powell that US interest rates were “just below” neutral put the dollar on the back foot.

The rand hit near four-month highs, shrugging off data showing that credit demand growth had slowed in October.

“The rand has gained most of its ground it lost in August and could see further gains. However, it will depend on the G20 meeting and local data,” said Bothma.

The market is closely watching a meeting between US President Donald Trump and Chinese leader Xi Jinping at the G20 summit on Saturday at which the leaders are expected to discuss trade.

Bonds also firmed, with the yield on the benchmark bond due in 2026 down 14 basis points to 8.900%.

“Local bonds also did well, (with the yield) down over 10 basis points, one of the bigger moves we’ve seen since the end of September,” said Bothma.

In equities, the All Share index was down 0.30% at 51,737 points, while the blue-chip Top 40 index fell 0.21% to 45,703 points.

“Volumes have been a bit better and we have performed well despite Naspers and the rand hedges weighing on the market,” said Ryan Woods, trader at Independent Securities.

Naspers slipped by 2.57% to R2,820 after Hong Kong technology giant Tencent, in which it has 31% stake, closed lower along with Asian markets.

Rand hedges such as luxury retailer Richemont slid R1.30 to R90.80, weighed down by a firmer local currency.