Wednesday, 18 November 2015 00:47
JOHANNESBURG: South Africa’s rand edged slightly firmer against the dollar on Tuesday but was still within easy reach of the previous day’s historical lows in nervous trade ahead of a central bank interest rate decision.
Stocks were also higher with Brait among the top gainers after the investment heavyweight posted a higher first-half net asset value.
By 1539 GMT the rand was 0.6 percent firmer at 14.2415 per dollar compared with where it ended Monday trade.
The local currency stumbled to an all-time low of 14.4400 on Monday, with some market analysts predicting further losses if the South African Reserve Bank keeps interest rates on hold on Thursday.
This would exacerbate pressure on the rand, which has fallen nearly 20 percent against the greenback as investors anticipate that US interest rates are set to start rising.
“The rand will continue to be vulnerable for further depreciation as we approach the start of US monetary policy normalisation,” NKC African Economics said in a note.
“Higher local interest rates will not remedy this situation as the rand remains at the mercy of broader emerging market sentiment.” Government bonds clawed back some of the previous day’s losses, with debt due in 2026 easing 6 basis points to 8.545 percent.
On the bourse, Brait climbed 3.92 percent to 157.64 rand after the firm reported a 60.1 percent increase in net asset value per share thanks to big ticket acquisitions of gym chain Virgin Active and British fashion chain New Look.
Other movers on the stock exchange included telecoms operator MTN, which fell 1.63 percent to 142.25 rand as it continues its negotiations with Nigerian regulators over a $ 5.2 billion fine. Overall, traders took their cue from firmer overseas markets as expectations of more stimulus from the European Central Bank helped sentiment.
The blue-chip JSE Top-40 index added 0.9 percent to 46,751 and the broader All-share index was up 0.84 percent at 51,981. Trade was robust with more than 280 million shares changing hands, well above last year’s daily average of 183 million shares.
