South Africa’s rand pauses recent slide, stocks down

Parvez Jabri August 20, 2019

JOHANNESBURG: South Africa’s rand firmed on Tuesday, pulling back from an 11-month low as long dollar investors took profits and awaited further clues on the outlook for the global and local economy.

Stocks closed weaker, dragged down by local retailers.

At 1520 GMT the rand was 0.89% stronger at 15.3325 per dollar.

The rand has lost more than 7% since Aug. 1, battered by local and global issues, breaking through a succession of technical milestones on its way to 15.50, a pivot-point last reached in September 2018 that has triggered stop-losses held by importers and opened the path to a deeper retreat.

But on Tuesday the currency’s slide paused. A paucity of data, low liquidity, and fresh hopes that a world recession will not materialise attracted buyers.

The focus now turns to the Jackson Hole seminar where US Federal Reserve chair Jerome Powell is expected to speak, and to a Group of Seven summit to be held in France this weekend for clues on what steps policymakers will take to bolster growth.

Locally, South Africa’s statistics agency publishes July inflation figures on Wednesday, and, while limited price growth this year saw the central bank cut lending rates last month, a recent bout of currency volatility may reignite bets that the cutting cycle will be short-lived.

In equities, the broader All-Share index was down 0.2%, while the benchmark Top-40 index declined 0.21%.

Leading the blue chip decliners was South African retailer Shoprite, which fell more than 9.25% to 126.86 rand after missing its full-year earnings forecast.

“The whole retail market is feeling the pressure and I think there’s a lot of negative sentiment,” said Nick Kunze, portfolio manager at Sanlam Private Wealth.

Supermarket chain Pick n Pay shed 5.7% to 56.84 rand, while food and clothing group Woolworths declined 3.4% to 52.10 rand.

In fixed income, the yield on the benchmark 10-year issue dropped 4.5 basis points to 8.39%.

Copyright Reuters, 2019

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