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Rand, stocks claw back some lost ground

Stocks also clawed back some of the value lost on Monday – the Johannesburg Stock Exchange’s (JSE) deepest daily drop on record.

South African rand.  Picture: Christa Eybers/EWN

JOHANNESBURG - The rand strengthened against the dollar on Tuesday, a day after the country’s currency, stocks and government bonds plunged on panic over the coronavirus pandemic.

Stocks also clawed back some of the value lost on Monday – the Johannesburg Stock Exchange’s (JSE) deepest daily drop on record.

The rand was up 0.5% at R16.6100 per dollar by 1513 GMT, having weakened 2.5% on Monday, when global markets were ravaged as the US Federal Reserve’s second emergency rate cut failed to quell worries about the virus’ mounting economic toll.

Investors’ focus was on a rate decision due from South Africa’s central bank on Thursday.

The South African Reserve Bank is expected to cut interest rates, but the easing is likely to be less aggressive than other global central banks trying to mitigate damage from the virus outbreak, according to a Reuters poll.

“If we look at the market, I think people are taking a pause for a moment. I think the market is exhausted and is just taking stock of where we are,” said Andre Botha, currency dealer at Treasury One.

South African President Cyril Ramaphosa declared a national state of disaster on Sunday as he announced a range of measures to contain the outbreak that has infected 62 people in the country.

On the bourse, the JSE’s Top-40 Index closed 2.96% higher at 37,375 points, while the broader all-share index rose 2.67% to 41,580 points.

While gold firm AngloGold Ashanti topped the blue-chip index, up just under 25%, the vast majority of firms leading the index higher were retailers.

Greg Davies, trader at Cratos Capital, said that pictures circulating on social media of empty shelves, sparking a perception of panic buying, will have helped boost the retailers, but added:

“On a more serious note, the petrol price will come down in April and there is a good chance of an rate cut on Thursday” – factors he said also favoured retailers.

In fixed income, the yield on the 10-year government bond was flat at 10.745%.