South Africa's rand weakens as dollar rises, stocks recover

JOHANNESBURG: South Africa's rand fell against the dollar on Wednesday as the greenback rose broadly after trade-related worries eased amid a slight softening of the U.S. administration's approach to Chinese investment.

At 1526 GMT, the rand traded at 13.8100 per dollar, 1.96 percent weaker than its close on Tuesday.

U.S. President Donald Trump said on Wednesday he would use a strengthened security review process to deal with threats from Chinese investments to acquire U.S. technologies, instead of imposing China-specific restrictions.

The yield on the benchmark government bond due in 2026  rose two basis points to 8.9 percent. The yield had risen to 9.24 percent last week, its highest since December.

Rand Merchant Bank fixed income analyst Gordon Kerr said local bonds held up well despite the risk-off environment.

"It remains to be seen if we can push lower from here. Investors don't seem to be in a real rush to buy. But that will change if USD/ZAR manages to break through 13.10," Kerr said in a note. "Given how bid the dollar is at the moment, it does seem like the market still favours the top side."

Data from the Johannesburg Stock Exchange showed foreign investors sold 34.7 billion rand ($2.5 billion) worth of South African bonds between January and June, the highest sell-off on record.

On the bourse, stocks lifted after two consecutive negative sessions led by bourse heavy-weight and rand-hedge Naspers.

The benchmark Top 40 index was up 0.39 percent to 49,329 points, while the all share index was up to 0.21 percent to 55,369 points.

"The all-share was down 1.5 percent and now we see the market up ...predominately driven by Naspers," said Grant Gilbert, portfolio manager at Nedbank Private Wealth.

Naspers, which owns about 30 percent of the Chinese technology firm Tencent, closed up 2.57 percent to 3177.99 rand.

Rand-hedged stocks, which make the bulk of their revenue outside South Africa and tend to strengthen as the currency weakens.