JOHANNESBURG: South Africa's rand firmed more than one percent against the dollar on Monday as the unit recovered from a sharp fall in the previous week, although traders said the rally would be short lived as uncertainty tamed appetite for the currency.
On the bourse, stocks closed at a three-week low, tracking global markets lower as anxiety grew ahead of a referendum on Britain's potential exit from the European Union (EU).
By 1455 GMT the rand had gained 1.23 percent to 15.0530 per dollar with some investors reassessing positions ahead of an interest rates decision by the United States central bank later in the week.
"We have the Fed decision on Wednesday. Next week we have the Brexit vote. So all that uncertainty is feeding into the markets at the moment," market analyst at ETM Analytics Ricardo Da Camara said.
The rand took advantage of a dip by the greenback, which slipped 0.3 percent against a basket of currencies, as uncertainty about the outcome of the Federal Open Market Committee policy meeting weighed.
The rand had retreated by close to 3.5 percent last week after initially rallying to its firmest in one month, with appetite for emerging markets currencies dampened by lower commodity prices and concerns over global growth.
In fixed incomes, government bonds were weaker, with the benchmark paper due in 2026 adding 4.5 basis points to 9.115 percent. Stock market traders said there was growing uncertainty ahead of the June 23 referendum, with investors questioning the stability of the EU.
"The market is basically discounting a Brexit so that's why we're seeing a general sell-off across the board globally," a trader at BP Bernstein, Vasili Tirasis, said. Falling oil and metals prices hit commodity-related stocks, with Sasol Ltd down 0.8 percent at 417 rand.
The All-Share index, in the red for a fourth consecutive session, was down 1.25 percent to 52,512 points, while the benchmark Top-40 index was 1.27 percent weaker at 46,432 points. Trade was below par with around 243 million shares changing hands, compared with last year's daily average of 296 million, according to preliminary bourse data.
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