JOHANNESBURG: South Africa's rand firmed against the dollar on Thursday, buoyed by a weaker greenback that was hurt by worries over the global economic outlook.
The weaker dollar, which reached lows last seen in October against a basket of currencies on the back of cautious comments from U.S. Federal Reserve chair Janet Yellen, helped drive the rand to its firmest level in six weeks
Locally, the market was nervous ahead of President Jacob Zuma's state of the nation address, which will be scrutinized for any signs of restoring confidence in the battered economy.
At 1556 GMT, the rand traded at 15.7100 versus the dollar, up 1.13 percent from Wednesday's New York at 15.8950.
Zuma is scheduled to deliver his statement to parliament at around 1700 GMT, against the backdrop of waning economic growth and uncertainty over fiscal policy after he fired two finance ministers in December.
"The markets will be watching for some signs of hope that all is not yet lost and the doom and gloom of the looming downgrade of South Africa may yet be avoided," said Gordon Kerr, fixed income analyst at Rand Merchant Bank.
Ratings agencies have warned of a downgrade for Africa's most industrialised economy should policymakers shift from a relatively prudent fiscal policies.
Government bonds were mixed, and the yield for the benchmark instrument due in 2026 added 0.5 basis points at 9.180 percent.
On the stocks market, shares ended sharply lower, tracking big falls in major overseas markets as concerns about the health of global economy mounted.
Investors worldwide were spooked by cautious comments from the head of the U.S. Federal Reserve that were taken to mean further rate hikes are unlikely in the near term.
Woolworths, which also operates in Australia, was hammered after the upscale clothes and food retailer gave a downbeat outlook for its South African market.
Shares in the company dropped 7.6 percent to 84.20 rand, their biggest daily percentage decline in two months.
The blue-chip JSE Top-40 index dropped 2.22 percent to 42,054 and the broader All-share index was down 1.78 percent to 47,411.
Trade was average with more 283 million shares changing hands, largely in line with last year's daily average of 296 million shares.
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