JOHANNESBURG: South Africa’s rand was firmer on Wednesday, shaking off the shock of economic growth contraction as some short covering saw a return of buying interest, while stocks were led higher by bourse-heavyweight Naspers.
At 1540 GMT the rand was 0.4 firmer at 12.7300 per dollar following a session-low of 12.8775 spurred by Tuesday’s data showing first quarter gross domestic product had shrunk 2.2 percent.
A firmer euro, the currency of South Africa’s largest trade partner, also boosted the rand.
The euro rose to a nearly two-week high against the dollar after officials said the European Central Bank could wind down its stimulus program by the end of the year.
Traders said surprise GDP contraction in South Africa had initially triggered a wave of technical selling, which on Wednesday then saw investors with short dollar positions having to buy the rand to close-out their exposure with a run to 13.00 mark in sight.
Government bonds ended slightly firmer, with the yield on the benchmark paper due in 2026 down 0.5 basis points to 8.67 percent.
In the equities market, the Johannesburg All-Share index closed 0.52 percent higher to 58,081 points, while the top-40 index climbed 0.63 percent to 51,736.
Internet and entertainment group, Naspers, rose 2.6 percent after Chinese gaming giant Tencent Holdings, in which Naspers owns a 31 percent holding, said it was working with authorities in China for its popular WeChat app to replace travel documents on border crossings.
Sibanye-Stillwater rose 2.58 percent to 8.74 rand and AngloGold Ashanti advanced 1.28 percent to 110.61 rand on firmer metal prices supported by a weaker dollar.
Source: Brecorder
