JOHANNESBURG: South Africa’s rand weakened on Thursday after comments by President Jacob Zuma raised concerns about higher spending on education, which would put added strain on the country’s already stretched public finances.
At 1600 GMT, the rand traded at 14.2450 versus the dollar, 0.6 percent weaker than its New York close on Wednesday.
Zuma said in parliament on Thursday that he would make an announcement on higher education soon. A currency trader said the market had taken the comments as a sign that free tertiary education would be introduced.
The Times newspaper, citing sources, reported this week that Zuma was planning to introduce free education across the board.
Confirming market concerns about South Africa’s economic outlook, Treasury said on Thursday that the country faced a difficult period ahead after an IMF visit.
Government bonds were also slightly weaker, with the yield on the benchmark instrument due in 2026 up 1 basis point to 9.305 percent.
Stocks weakened in a volatile market that took its cue from weakness in the currency, with Steinhoff International weighing on the bourse.
The benchmark Top-40 index fell 0.4 percent to 53,514 points, while the All-Share index dropped 0.36 percent to 59,862 points.
Steinhoff’s Johannesburg-listed shares extended losses from the previous session to close down 1.37 percent at 58.49 rand.
Steinhoff’s local shares fell to a 10-week low on Wednesday after Reuters reported the company did not tell investors about almost $1 billion in transactions with a related company despite laws that some experts believe require it to do so.
“That’s the thing with volatility, … if there is any bad news built into a share, say for example a Steinhoff or an EOH, they will get particularly hard hit,” said Independent Securities trader Ryan Woods.
Further losses were curbed by petrochemicals and energy firm Sasol which led gains on Johannesburg’s blue-chip Top-40 index, lifting 0.96 percent to 434.96 rand on the back of a weaker currency and higher oil prices.
Oil prices steadied just below two-year highs supported by supply cuts by major exporters, with Brent crude oil reaching an intra-day high of $64.65, its highest since June 2015.
Source: Brecorder.com
