JOHANNESBURG: South Africa's rand lost some ground against the US dollar on Tuesday with traders taking a cautious stance ahead of local government elections on Wednesday and global economic data later in the week. Stocks slipped to an almost two-week low on Tuesday with financials among the biggest decliners on the index but gold mining companies kept the downside momentum in check.
At 1500 GMT, the rand traded at 13.9650 per dollar, 0.33 percent softer from its New York close on Monday. South Africa holds local elections on Wednesday when financial markets will remain closed and opinion polls suggest the ruling African National Congress party is in a close race for votes in major cities it has held since the end of apartheid rule 22 years ago.
"With the focus on the impending local municipal elections tomorrow, market participants understandably cautious, post that focus will be on the Bank of England and then the US non-farm payroll data on Friday," Nedbank Capital analysts in a note. The Bank of England looks ready to cut interest rates for the first time since 2009 on Thursday, seeking to stop Britain's vote to leave the European Union from kicking the country into recession.
It may even go a step further and pump billions of pounds into financial markets.
Government bonds weakened alongside the currency, with the yield for the benchmark instrument due in 2026 adding 2 basis points to 8.655 percent.
On the bourse, the benchmark Top-40 index dropped one percent to 45,560 while the All-Share index weakened by a similar margin to 52,533. The decliners included Standard Bank, going down 3 percent to 140 rand. Life insurance provider Sanlam fell 3 percent to 67 rand while FirstRand Bank decreased 3 percent to 49 rand. Shares in gold mining companies surged with Harmony Gold gaining 6 percent to 67 rand and Sibanye Gold increasing 6 percent to 70 rand.
BP Bernstein trader Vasili Tirasis said gold stocks were bolstered by the weaker rand currency, which boosts dollar-denominated profits when converted into the local unit.
Trade was below average with about 255 million shares changing hands compared with last year's daily average 296 million shares.
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