JOHANNESBURG: South Africa's rand firmed on Thursday, brushing off a rate increase by the U.S. Federal Reserve, with traders continuing to see carry potential in the unit.
The bourse was weighed down by gold stocks for a second session, as prices for the precious metal took a hit from a surging dollar.
At 1500 GMT the rand was 0.73 percent firmer at 14.0525 per dollar compared to a close of 14.1325 overnight.
The rand defied expectations it would see some selling pressure in the wake of another U.S. rate rise, suffering modest profit-taking in early trade before resuming a rally that has lifted it to a near one-month best.
Last Thursday the South African central bank struck a hawkish tone when it narrowly decided to hold benchmark rates steady, spurring forward markets to up bets on policy-tightening in the near term and investors to see yield-carry potential in the unit.
"It was a little surprising to see the rand appreciating, especially as there were some technical signals pointing to the possibility USDZAR might bounce higher," analysts at Investec said in a note, adding improved policy certainty was supporting demand.
Traders said the rand was now poised to test the 13.95 level as the technical picture turned positive. Trade on Friday is set to be impacted by the release of budget and trade figures.
Bonds were firmer, with the yield on the government bond due in 2026 down 8 basis points to 8.99 percent.
The blue-chip top-40 index closed down 1.11 percent at 49,800 points, and the All-share index fell 1.03 percent to 55,988 points. The gold index slid 4.71 percent.
"Some metal prices like gold and platinum have come off a high so there is a lot of profit-taking happening with these shares," said Ferdi Heyneke, a portfolio manager at Afrifocus securities.
Gold prices broke below their recent trading range on Thursday after the U.S. dollar surged to two-week highs.
Shares in private healthcare group Netcare tumbled as much as 13 percent to a seven-month low after it said the core profit margin at its biggest division would fall 30 to 50 basis points this financial year.