JOHANNESBURG: South Africa's rand firmed on Monday as intervention by China's central bank in the yuan currency helped ease global investor aversion toward emerging market assets in trade thinned by a holiday in the United States.
Stocks inched lower on Monday to end just in the red as a rebound in European shares fizzled after the European Central Bank (ECB)said it would quiz euro zone lenders about high levels of bad loans.
By 1625 GMT the rand inched 0.09 percent firmer to 16.7670 per dollar, hanging on to earlier gains as the central bank of China's efforts to stabilise the yuan saw demand for riskier assets in developing economies improve.
Lingering concerns over the local economy would however limit the rand's recovery, analysts said, more so with consumer inflation data due on Wednesday likely to show a spike in food prices owing to severe drought conditions.
"Expect the rand to battle to improve in the weeks and months ahead. We need quite a bit of water of pass under the bridge before the rand can start clawing back some of that improved sentiment," said economist at Credit Guarantee Insurance Luke Doig.
Bonds weakened, unable to shake the increased risk associated with South African assets, with the yield on the government's 10-year issue rising 15.5 basis points to 9.87 percent, its highest in one week.
On the bourse the benchmark Top-40 index slipped 0.03 percent to 42,093 while the wider All-share index finished 0.18 percent lower at 46,876.
Decliners included petrochemicals group Sasol, which shed 3.75 percent as Brent and U.S. WTI futures were last down 0.5 percent at $28.88 and $29.38 a barrel, respectively, just above 12-year lows.
Technical factors could, however, give the market some support this week, according to analysts.
"We are looking pretty oversold at these levels on traditional technicals," said Lloyd Priestman, a markets analyst at Caleo Capital in Johannesburg.
Momentum indicators such as the 14-day RSI suggest the Top-40, which has shed 8 percent to date in 2015, has strayed into oversold territory, making a support rally likely in the coming week.
Gainers on the day included steel-maker ArcelorMittal South Africa, which added 9.7 percent to 5.89 rand after it said that 68 percent of its 4.5 billion rand ($270 million) rights offer had been taken up and that its parent group would subscribe for the remainder.
Decliners pipped advancers 194 to 127 and over 240 million shares changed hands, a little over the 2015 daily average.
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