Rand firms as focus turns to fiscal measures, stocks dip

At 1510 GMT, the rand traded at 18.7460 versus the US dollar, 0.23% firmer than its previous close.

Picture: pixabay.com

JOHANNESBURG - The rand firmed in afternoon trade on Monday as the government discussed new measures to contain the economic impact of the COVID-19 pandemic, while stocks dipped.

At 1510 GMT, the rand traded at 18.7460 versus the US dollar, 0.23% firmer than its previous close.

President Cyril Ramaphosa’s cabinet was due to meet to discuss new measures to contain the economic impact of the coronavirus outbreak, including whether to close ailing state airline South African Airways, which has been a major drain on resources.

Ramaphosa said in a weekly newsletter to the nation that the government would increase welfare provision to help poor households suffering because of a lockdown aimed at containing the country’s coronavirus outbreak.

South Africa’s public finances were in bad shape before it detected its first case of the new coronavirus in March, constraining its ability to provide stimulus.

Lukman Otunuga, senior research analyst at FXTM, said in a note that if a potential stimulus package of R1 trillion ($53.25 billion) - as reported by local media - became a reality, there could be some light at the end of the tunnel.

The Johannesburg Stock Exchange’s Top-40 index dipped 0.55% to close at 44,797 points, while the All-Share index weakened 0.58% to 48,850 points.

Banking shares fell 2.19%, with Absa down 2.15% at R81.51, and FirstRand falling 1.96% to R36.93.

Further losses were curbed by the bullion sector, which rose 2.12%, with Harmony Gold up 2.12% to R54.94 after it said it would it would resume operations up to 50% of their capacity after the government relaxed regulations on miners during the coronavirus lockdown.

In fixed income, the yield on the 2030 instrument was down 0.5 basis points at 10.300%.