JOHANNESBURG: South Africa’s rand rose on Tuesday as the dollar fell after US President Donald Trump fired Secretary of State Rex Tillerson, while stocks weakened.
At 1530 GMT, the rand traded at 11.7800 per dollar, 0.36 percent firmer than its Monday close.
Trump said on Twitter he was replacing Tillerson with Mike Pompeo, the director of the Central Intelligence Agency (CIA), and that Gina Haspel would take over from Pompeo.
The dollar was also held down by news of slowing US inflation, suggesting that the Federal Reserve remained on track to raise interest rates at a gradual pace.
The rand barely reacted to local data showing manufacturing output rose 2.5 percent in January, supporting market views that the domestic economy retained momentum at the start of the year.
The currency has largely stayed at elevated levels in recent months, buoyed by expectations of faster economic growth under South Africa’s new political leadership.
“Hopes for a political change have been spurring the rand higher since November. However, the air should be getting thinner for further surges of the rand as the new government will have to ‘deliver’ now,” Commerzbank analysts wrote in a note.
“We expect a moderate rand depreciation trend in the coming months”.
In fixed income, the yield for the benchmark government bond due in 2026 rose 3 basis points to 8.095 percent, reflecting weaker bond prices.
In the equities market, stocks were a little volatile on the day, often changing from red to black and red again as they tried to find a fresh catalysts.
The Johannesburg-All Share index fell 0.19 percent to 59,084 points, while the Top-40 index edged down 0.13 percent to 52,371 points.
Crisis-hit South African retailer Steinhoff closed down 3.41 percent to 4.25 rand after it said it has sold its 17 percent stake in KAP Industrial for 3.66 billion rand ($311 million), another step in its efforts to shore up its finances and pay down debt.
KAP shares fell as much as 4 percent before recovering to close slightly up 0.47 percent to 8.54 rand.
“The market was thinking that they would sell their whole stake. Maybe the market takes it as a positive,” said Cratos Capital trader Greg Davies.
Still reeling from a move by US President Donald Trump to impose tariffs on US metal imports, steel maker ArcelorMittal South Africa fell 9.47 percent to 2.58 rand. ($1 = 11.7749 rand)
Source: Brecorder.com
