Press "Enter" to skip to content

South African rand firms against dollar, power cuts cap…

JOHANNESBURG, Aug 13 – The rand firmed against the dollar on Thursday as hopes of more economic stimulus in the United States waned, although fresh power cuts in South Africa limited its currency’s gains.

At 1500 GMT the rand was 0.34% firmer at 17.4050 per dollar, but failed to breach the week’s high of 17.3500, while the dollar fell to its lowest in a week against a basket of currencies.

With lending rates still relatively high in South Africa, despite deep cuts by the central bank, the rand and local bonds have seen investor inflows, but analysts have said these may offer only short-term relief.

“The rand posted meaningful short-term gains yesterday as apparent stop-losses were triggered below 17.5000, and this provided the catalyst for some exporter activity that saw the local unit reach the mid-17.30s,” analysts at Nedbank wrote.

“However, it has not been able to sustain these gains. Local markets are likely to be cautious, as Eskom has announced the resumption of stage 2 load-shedding,” they added in a note.

State power firm Eskom said breakdowns of some its generating units had forced it to resume countrywide blackouts, or loadshedding, with “stage 2” seeing it slash up to 2,000MW from the national grid.

Stocks were unchanged as investors tried to make sense of speculation that President Cyril Ramaphosa might soon announce further easing of restrictions such as lifting an alcohol ban.

This sustained gains in casino, hotel and beverage firms all week, with City Lodge up 15.35%, Tsogo Sun Gaming surging 12.5%, Sun International 4.95% firmer and spirits and cider maker Distell Group up 4.26%.

Internet group Prosus and Naspers, which make up about 35% of the local market, fell 2.48% and 2.30% respectively, mirroring declines in WeChat parent Tencent even after management tried to soothe concerns about the U.S. banning the app.

Naspers, through its subsidiary Prosus, holds a more than 30% stake in Tencent.

Absa closed 0.77% weaker, a day after the bank warned its half-year profit could be almost wiped out as a result of the coronavirus crisis.

Meanwhile, cement maker PPC fell 2.41% after saying it may consider a rights issue as part of talks about restructuring and refinancing the group.

The Johannesburg All-Share index closed unchanged at 57,419 points, while the Top-40 index ticked down 0.08% to 53,082 points.

In fixed income, the yield on the benchmark government bond due in 2030 3.5 basis points to 9.255%. (Reporting by Olivia Kumwenda-Mtambo and Nqobile Dludla; Editing by Alexander Smith)

Be First to Comment

Leave a Reply

Your email address will not be published. Required fields are marked *