JOHANNESBURG: South Africa's rand weakened against the dollar on Monday as the greenback rose on expectations that US interest rates would rise soon, adding pressure on the currency which has been knocked by concerns over the finance minister's future. Stocks closed slightly higher, with rand hedge companies benefiting from the weaker currency.
By 1522 GMT, the rand was down 0.13 percent against the dollar to 14.3875, off Friday's close at 14.3690.
Against a basket of major currencies, the dollar hit its highest in nearly two weeks at 95.724 after senior Federal Reserve officials bolstered expectations that US interest rates would rise soon.
Traders also said the rand was weighed down by lingering uncertainty over whether Finance Minister Pravin Gordhan faces arrest following an investigation by the elite police unit Hawks over a surveillance unit set up in the revenue service when he was in charge.
"The dollar is quite strong on global markets so that's not helping the rand's cause at all," said Bidvest Bank chief dealer, Ion de Vleeschauwer.
"The predominant factor remains the political shambles with our finance minister and the Hawks. As long as that is around, the rand has very little potential to strengthen."
Separately, the central bank said it will not respond to short term market volatility triggered by news of possible charges against Gordhan, Deputy Governor Daniel Mminele said.
On the stock market, the benchmark Top-40 index was up 0.23 percent to 46,912 points while the All-Share index rose 0.11 percent to 53,564 points.
A strengthening dollar hoisted up local rand-hedged stocks, or those with operations abroad.
"Rand hedges" are companies that reap the bulk of their revenue outside of South Africa, making them less sensitive to weakness in the currency.
Britain-based property company Capital & Counties rose 0.76 percent to 54.38 rand, beer maker SABMiller gained 1.69 percent to 828.82 rand, while British American Tobacco was up 0.99 percent at 902.86 rand.
The prospects of higher US interest rates saw gold shares taking a hit. Gold Fields weakened 3.61 percent to 81.45 rand, while Sibanye Gold fell 2.42 percent to 60.50 rand.
"(The market is) expecting the Fed to hike rates in September, most bets placed it for December and this is why we are seeing dollar strength coming through over the weekend hence the weaker gold price," BP Bernstein trader Vasili Tirasis said.
Government bonds yields were mixed across the curve, with the 2026 benchmark down 1.5 basis points to 8.995 percent.
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