Adds latest figures, analysts comments
JOHANNESBURG, April 22 – The South African rand weakened on Thursday, in uncertain global trade, as investors waited for the next moves in lending rates in the United States and Europe and weighed the impact on economic recovery of the delay in vaccine deployment.
At 3:30 p.m. GMT the rand ZAR = D3 was 0.42% lower at 14.3100 to the dollar, retreating from an overnight close at 14.2500 in what has so far been a week of limited moves in a narrow range, reflecting the wider uncertainty in world markets.
The rand has far outperformed its emerging market peers, gaining around 3% year-to-date against the greenback, largely due to the high real return, or carry, on the currency which is based on low inflation and a high risk premium. .
Rising commodity prices have also dampened the demand for money against rising yields on U.S. Treasuries and some evidence that lending rates ethe uro zone is going up.
“Given the rand‘s propensity to spin quickly, the question is how long can the current momentum persist? Our fair value estimate for USD / ZAR is 14.00, based on the rally in commodity prices, ”said RMB analyst Nema Ramkhelawan-Bhana.
“Due to persistent fiscal risks, we expect USD / ZAR to trade above fair value, around a midpoint of 14.80,” Ramkhelawan-Bhana added in a note.
Bonds were also weaker, with the benchmark issue yielding 2030 ZAR2030 = up 3 basis points to 9.125%.
Johannesburg Stock Exchange (JSE) shares opened lower, recouping some of the day’s losses before retreating to close in the red.
The benchmark FTSE / JSE all-share .JALSH closed down 0.26% at 66,972 points. Top 40 Top Companies Index .JTOPI completed 0.35% lower at 61,183 points.
The sector’s performance was mixed with weaker banks, financials and mining, while real estate and industrials advanced.
“There is no clear trend,” said Greg Davies, analyst at Cratos Capital. “It’s hard to see what can push us much higher from here, but there have been purchases from the banks,” he said, adding that the banks are currently offering the most value.
(Reporting by Mfuneko Toyana and Promit Mukherjee; Editing by Alex Richardson)
((mfuneko.toyana@thomsonreuters.com; +27117753153; Reuters messaging: mfuneko.toyana.thomsonreuters.com@reuters.net))
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