South Africa's rand set for monthly gains, commodities lift stocks

JOHANNESBURG: South Africa's rand firmed up against the dollar on Monday and was on track for monthly gains of more than 5pc thanks to a softer greenback and higher commodity prices.

At 1500 GMT the rand was 0.51pc firmer at 13.7200 per dollar, taking the monthly gain so far to 5.3pc.

The dollar came under pressure more broadly on Monday as traders assessed the impact of a surge in U.S. inflation before monthly jobs data later this week.

The rand hit its firmest since February 2019 last week, driven by investor bets that the U.S. central bank would lend at low rates for longer despite signs of higher inflation in the world's biggest economy.

"The strongly supportive global monetary policy environment is benefiting the domestic currency, as are South Africa's interest rate differentials," said Annabel Bishop, chief economist at Investec.

"The rand's substantial run in strength to date is not expected to be endless, and as the U.S. shows greater signs of recovery, so market fears about the U.S. tapering its QE programme will grow and this would be expected to reduce market appetite for risk taking."

Resource-rich South Africa's currency has also benefited from a rise in commodity prices as top importer China's economy improves.

Stocks also firmed, boosted by commodity prices like gold , platinum and palladium.

Gold was on course for its biggest monthly jump since last July as the dollar headed for a second month of decline, while growing inflationary pressures also lifted bullion's appeal.

Leading gainers was Impala Platinum up 5.25pc. Northam Platinum rose 5.19pc while Anglo American Platinum climbed 4.67pc.

Among gold stocks, Harmony Gold took the lead, up 4.37pc followed by Gold Fields and Sibanye Stillwater up 4.02pc and 3.86pc.

Standard Bank Group rose 1.91pc after it said it expects to report a 40pc rise in profit for the six months to June 30.

Overall, the Johannesburg All-Share index climbed 0.61pc, while the Top-40 index rose 0.71pc.

Bonds were firmer, with the yield on the benchmark 2030 government issue down 4 basis points to 8.910pc.