South African rand softer as risk appetite wanes, stocks gain

JOHANNESBURG: South Africa's rand fell on Monday, in line with other emerging markets, as a spike in global coronavirus cases curbed appetite for risk-driven assets.

Better-than-expected Chinese economic data headed off further weakness among riskier currencies, but was not enough to shift currency traders' mood decisively.

At 1445 GMT, the rand traded at 15.2900 versus the dollar, 0.43% weaker than its previous close.

"The rand remains substantially weaker than at the start of the year, as South Africa is differentiated into the worst quartile of EM currencies on its poor growth and credit prospects, with domestic politics also hamstringing the economy," Annabel Bishop of Investec said in a note.

South African state-power utility Eskom on Monday implemented scheduled power cuts, locally known as "load shedding", for a fifth consecutive day after a loss of generation capacity. The utility has struggled to power up Africa's most industrialised economy in recent years.

"South Africa risks seeing growth not even reach 2.0% year/year this year if load shedding intensifies," Bishop said.

Focus now turns to the central bank's latest interest rate decision on Thursday, when most economists expect it to hold the repo rate at 3.5%, but a small minority are predicting a rate cut.

Stocks on the Johannesburg Stock Exchange (JSE) gained on Monday as positive economic data from China boosted sentiments locally, despite an otherwise subdued market.

The benchmark FTSE/JSE all-share index closed up 0.26% to 63,6714 points while the bluechip FTSE/JSE top-40 companies index ended 0.17% up to 58,548 points.

In fixed income, the yield on the 2030 benchmark instrument was flat at 8.845%.