South Africa’s rand firms as investors await next bout of weakness

Usama Fayyaz August 16, 2019

JOHANNESBURG: South Africa’s rand was firmer early on Friday, adding to the previous session’s gains in a recovery driven mainly by investors covering their short positions in anticipation of sharper falls as local and global growth fears loom.

At 0650 GMT the rand was 0.57pc firmer at 15.1925 per dollar compared with a close of 15.2800 overnight in New York, bringing gains to more than 1.5pc since Wednesday when the currency tumbled to just short of 11-month lows.

The rand has fallen more than 9pc since the beginning of  August, pressured by the rising likelihood of a credit ratings downgrade by linked to massive, additional bailout to state power firm Eskom and, this week, by signs of a slower global growth.

With fundamentals and sentiment pointing to further rand weakness, many traders see a short term rally, with buyers coming in at current prices before the next tranche of losses.

Bonds also firmed, with the yield on the benchmark 10-year government paper due in 2026 down 4 basis points to 8.395pc.

In stocks, petrochemical giant Sasol said it would delay the release of its 2019 financial results due to possible “control weaknesses” at its US ethane cracker project.

Shares in Sasol fell 15pc at market open at 0700 GMT.

Copyright Reuters, 2019

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