JOHANNESBURG: South Africa's rand gained for the second straight day against the dollar on Wednesday as fears about the global economic outlook eased, while stocks ended a touch higher.
The rand held its ground despite comments from Federal Reserve chair Janet Yellen which suggested that the U.S. central bank had not taken a March interest rate increase off the table.
At 1525 GMT the South African unit traded 1.7 percent firmer at 15.7965/dollar compared with Tuesday's close. It was up more than 2.4 percent on the day at 17.6860 versus the euro.
The rand was the second-strongest performer against the greenback in a basket of 25 emerging market currencies monitored by Reuters, trailing only the Russian rouble
"(The rand is firmer due to) broad covering of short rand positions versus the dollar amid a rebound in risky assets," IGM analyst Christopher Shiells said.
"The higher carry of South African assets is leading to a slight outperformance, especially as oil prices have failed to rally thus capping gains in other EM currencies."
In carry trades, investors sell currencies with relatively low interest rates and use the funds to buy currencies yielding a higher interest rate, such as the rand.
Government bonds also benefited from the risk-on environment, which the yield for paper due in 2026 closing 12.5 basis points lower at 9.21 percent.
On the bourse, stocks ended a touch higher as investors chased after bargain in battered shares such Naspers but gains were restricted by sharp losses in mining shares.
"The strengthening rand and weaker commodity prices are putting a lot of pressure on some of mining stocks," said Inkunzi Investments' trader Petri Redelinghuys.
Bourse and mining heavyweight Anglo American retreated 6.6 percent to 75.24 rand and rival BHP Billiton lost 4 percent to 149.07 rand.
Copper hit a two-week low on Wednesday on persistent worries over global growth.
On the gainers' list Naspers added 2.25 percent to 1,772.43 rand, breaking a three-day losing streak on views that the stock has strayed into a oversold territory.
The blue-chip JSE Top-40 index inched up 0.07 percent to 43,007 and the broader All-share index edged up 0.15 percent to 48,273.
Trading volumes were slow with more than 259 million shares changing hands, below last year's daily average of 296 million shares.
Comments
Comments are closed.