JOHANNESBURG: South Africa’s rand traded flat on Thursday, drifting in a narrow band against the dollar as traders held off on large bets and took profit’s after the previous session’s rally to a one-week best.
Stocks ended down, led by the poor performance of tobacco giant British American Tobacco.
At 1500 GMT the rand was 0.02 percent firmer at 11.9400 per dollar, compared to a close of 11.9375 overnight in New York.
After drawing significant bids on Wednesday when consumer inflation hit a seven-year low, the rand saw interest wane around the 11.94200 point, with investors eyeing further improvements in economic outlook before committing to long positions.
Bonds continued to rally, with yield on the benchmark paper due in 2026 down a further 2 basis points to 8.005 percent.
“Due to concerns about rising inflation rates, the rand had depreciated slightly against the dollar ahead of the publication of the March data yesterday, but the losses were immediately retraced,” said currency analyst at German-based Commerzbank Elisabeth Andreae.
Andreae said wage pressures, rising oil prices and higher electricity prices together with global risks would however deter the local central bank from cutting interest rates after it reduce them in March.
On Thursday the civil servants union said it had declared a dispute with government after protracted wage hike talks, raising the spectre of a strike just as government looks to win over investors trust with deep cuts to the wage bill.
On the stock market, the Top-40 index was down 0.58 percent to 50,729 points while the broader all-share fell 0.32 percent to 57,526 points.
One of the biggest decliners was British American Tobacco down 6.85 percent at 618.99 rand per share, tracking its London-listed counterpart.
“The weakness is due to British American tobacco being down, on the back of Phillip Morris'(BAT’s biggest competitor) poor results. Investors are using that as a proxy and worried about the lack of volume growth,” said Nedbank Portfolio Manager Grant Gilbert.
On Thursday Philip Morris shares fell 5.7 percent after first quarter results were below expectations.
One of the biggest gainers was South African retailer Pick n Pay Stores rose by 8.9 percent to 75.00 rand, after full-year earnings rose 7.1 percent.
Further gains came from the gold stocks rose 1.16 percent boosted by spot gold prices hitting nine and half month highs on Thursday.
Source: Brecorder
