South Africa's rand edges up, focus on Powell's speech

JOHANNESBURG: South Africa's rand firmed slightly on Thursday, ahead of a speech by US Federal Reserve Chairman Jerome Powell that may determine the trend for global bond markets and currencies.

At 1620 GMT, the rand traded at 15.1000 against the US dollar, 0.05% firmer than its previous close.

With a light local data calendar this week, the rand's movements have been mainly driven by offshore events.

Investors are keenly watching to see if Powell, who is due to speak at a Wall Street Journal conference at 1705 GMT, will address concerns about the risk of a rapid rise in long-term borrowing costs.

"Policymakers are generally keeping to the sidelines but markets will be intrigued by comments from the Fed chairman at the WSJ webinar tonight," said Nema Ramkhelawan-Bhana, an analyst at RMB.

"He is expected to hold the line on easy policy but any mention of the uptick in treasury yields being for the 'wrong' reasons or the possibility of a 'twist' could make for a volatile closing session this week."

Rising US bonds yields and the possibility of the bank retreating from its massive bond buying programme has fuelled fears of another "taper tantrum" like in 2013 when emerging markets were hit hard.

South African stocks fell alongside global peers, with the Johannesburg All-Share index closing 0.85% weaker at 67,743 points, while the Top 40 index fell 0.97% to 62,250 points.

Leading the decliners was financial services group Liberty Holding, which shed 6.75%, after it swung to a full-year loss before tax of 2.2 billion rand ($145.8 million)from a profit of 6.2 billion rand.

Quantum Foods fell 1.64% after the animal feed and poultry company said half-year earnings will likely be 20% lower.

Government bonds weakened, with the yield on the instrument due in 2030 rising 10 basis points to 9.135%.