South Africa's rand firms as dollar slides, stocks jump

JOHANNESBURG: South Africa's rand firmed on Wednesday after the dollar fell as investors digested U.S. consumer price data that showed unchanged headline inflation, reinforcing speculation of fewer U.S. interest rate rises than previously expected.

Stocks also rose for a second consecutive session, tracking Asian markets which jumped on the back of further indications of easing Sino-U.S. trade tensions.

At 1501 GMT, the rand traded at 14.1575 per dollar, 1.12 percent firmer than its New York close of 14.3175 on Tuesday. The currency hit an intraday low of 14.3600.

Investor mood was also lifted after U.S. President Donald Trump said he would intervene in the Justice Department's case against a top executive at China's Huawei Technologies if it served national security interests or helped to close a trade deal.

"It started this morning with Huawei's chief financial officer who was released on bail and Donald Trump stating that he will intervene if it helps the U.S.-Sino trade agreement," said Treasury One dealer Andre Botha.

"The (U.S.) CPI came in slap bang at the number and the dollar is a bit weaker today, assisting the rand." Botha said, adding: "More importantly tonight there'll be (British Prime Minister) Theresa May's vote of no confidence. We think she will survive the vote of no confidence and we see the pound picking up on that and it has helped the rand as well."

The rand did not react significantly to data showing South Africa's consumer price inflation rose to 5.2 percent year-on-year in November, while retail sales increased more than expected in October as the economy showed further signs of recovering from recession.

In fixed income, the yield on the benchmark government bond due in 2026 fell 0.5 basis points to 9.16 percent.

In equities, the blue chip Top 40 index climbed  0.82 percent to 45,603 points, while the All Share index  rose 0.8 percent to 51,598 points.

"We are following the Far East higher after China said it was considering dropping tariffs on U.S. cars and indications of some progress with the trade talks," said Wayne McCurrie, portfolio manager at FNB Wealth and Investments.

Global markets rallied on Wednesday as Trump sounded upbeat about a trade deal with China following news that China was considering reducing tariffs on U.S. cars.

Shares in Steinhoff rose more than 20 percent, on track for their biggest daily gain in nearly a month, after the company's Pepkor Europe business reported a jump in annual revenue growth.

Steinhoff closed 16.34 percent higher at 1.78 rand.