Rand recovers after sell-off, stocks open higher
The rand firmed against the US dollar early on Friday, recovering from the previous session’s tumble as global risk sentiment was dented by fears of a second wave of coronavirus infections.
JOHANNESBURG - The rand firmed against the US dollar early on Friday, recovering from the previous session’s tumble as global risk sentiment was dented by fears of a second wave of coronavirus infections.
The rand was trading 0.3% up R17.4050 per dollar at 0700 GMT, having fallen more than 1% on Thursday.
South African-focused investors are now awaiting a supplementary budget pencilled in for 24 June.
Finance Minister Tito Mboweni is expected to unveil a major shake-up in spending and revenue forecasts for the recession-hit economy when he tables the supplementary budget.
“It is going to be a massive task for Mboweni to juggle the country’s costs and, therefore, it is certainly prudent to take some positioning off the table given the potential for disaster,” Standard Bank chief trader Warrick Butler said in a note.
“It is easy to put the risk back on once the dust has settled.”
South Africa’s economy was in bad shape before the COVID-19 pandemic struck. A strict nationwide lockdown from late March curtailed production across key sectors such as mining and retail, with the central bank predicting a 7% contraction in gross domestic product this year.
On the stock market, the Top-40 index was up 0.9% while the broader all-share index rose 0.7% in early trade.
In fixed income, the yield on the long-dated government bond due in 2030 was down 1.5 basis points at 9.315%.