South African rand surrenders gains as economy concerns weigh

JOHANNESBURG: South Africa's rand surrendered its earlier gains in late trade on Thursday due to lingering concerns over the economy, while a rebound in market heavyweight Naspers brought some relief on the bourse.

The rand had earlier in the session gained more than one percent as emerging markets bounced back on news that a Chinese delegation will travel to the United States in August for trade talks.

The prospect of the world's two biggest economic powers  preventing a looming trade war boosted investor sentiment after a worrying week for emerging markets in the wake of a currency slump in Turkey.

But the gains were erased in late afternoon trade. At 1524 GMT, the rand traded largely steady at 14.5575 versus the U.S. dollar.

"In times of risk-off sentiment the focus is on the risks for the South African economy and that is putting pressure on the rand," Commerzbank analysts wrote in a note.

The currency had slid more than 2 percent on Wednesday after ratings agency Moody's warned that the pace of South Africa's fiscal consolidation had slowed and retail sales data disappointed, underlining the fragility of the economy.

The rand is down around 3 percent this week, also hit by investors' move to dump assets seen as risky in the wake of the Turkish lira's plunge. The lira has weakened around 34 percent against the dollar this year.

The rand, one of the most-traded emerging market currencies, is highly susceptible to swings in sentiment on global markets.

Government bonds firmed, with the yield on the benchmark government bond maturing in 2026 down 2.5 basis points at 8.995 percent.

On the equities market, indexes rose, helped by a number of solid earnings reports and the rebound of market heavyweight Naspers from the previous session's lows following internet giant Tencent's results. Naspers' stock rose 2.79 percent at 3,146 rand.

The Johannesburg All-share index closed 1.65 percent stronger to 56,562 points, while the blue-chip top 40 index climbed 1.8 percent to 50,506 points.

Exxaro Resources Ltd was the second biggest gainer on the all-share index after reporting a 8 percent jump in half-year profit. It surged 7.99 percent at 140 rand.

Lender Standard Bank closed 1.59 percent higher after posting a 5 percent increase in half-year profit.