South Africa's rand strengthens, stocks scale one-month high

JOHANNESBURG: South Africa's rand remained on the frontfoot on Wednesday, rallying for a third consecutive session after data showing consumer inflation had slowed, easing pressure on the ailing economy.

Stocks rose to a one-month high supported by higher precious metals prices, specifically platinum.

By 1600 GMT the rand had gained 0.21 percent to 14.2350 per dollar, extending a two-week run that has seen the unit strengthen nearly 7 percent and break through major resistance points towards the sub 14.00 mark, a level it last touched in mid-November.

Inflation came in at 6.3 percent year-on-year in March, in line with forecasts in a Reuters poll, from 7 percent in February.

Analysts however believe the relief for the economy will be short lived, and that the central bank will continue to raise interest rates, having already hiked by 75 basis points in 2016.

"Today's lower inflation figure provides some welcome relief for South African consumers, but we doubt that this is the sign of things to come," said Africa analyst at Capital Economics John Ashbourne.

Bonds were weaker on the day, with benchmark paper due in 2026 adding 7 basis points to 8.955 percent.

On the bourse, stocks rose for a fourth straight session as metal prices buoyed Impala Platinum Holdings and Anglo American.

Impala Platinum rose 16.67 percent to 56.47 rand and Anglo American added 8.19 percent to 163.50, while other mining companies also gained.

But one analyst thinks it will be short lived due to low economic growth and a volatile political environment.

"I don't think that it is sustainable, especially given how quickly these prices have improved. So over the long run, I'm still very cautious on commodities," said Nedbank Private Wealth stockbroking portfolio manager Grant Gilbert.

The broad All-share index advanced 0.77 percent to 53,789 points to a one-month high, while the benchmark Top-40 index rose 0.52 percent to 47,271 points.

Trade was on par, according to preliminary bourse data, with about 275 million shares changing hands, slightly lower than last year's daily average of 280 million.