Rand gains for first time in 10 days
SA’s rand gained against the dollar on Thursday morning as new figures from China boosted commodity prices.
|||Johannesburg - The rand gained against the dollar for the first time in 10 days and South African bonds rose as figures from China showing a pick-up in manufacturing boosted commodity prices.
The South African currency was 0.4 percent stronger at 14.6680 by 10.07am in Johannesburg. The rand recovered some of its 1.6 percent slump on Wednesday, caused partly by the country’s biggest specialist fixed-income money manager, Futuregrowth Asset Management, saying it would stop lending to six state companies because of governance concerns.
The rand lost 5.8 percent in August as speculation mounted that Finance Minister Pravin Gordhan may be replaced as part of an investigation by a special police unit.
The rand “should try and stabilise at these higher levels but the sentiment is such that negative local news flow could easily set off another run higher”, John Cairns, strategist at Rand Merchant Bank, said in an emailed note. “Futuregrowth’s decision to cut off fresh lending to certain SOEs highlights the private sector’s uncertainty over the political situation. It also, likewise, ratchets up the pressure in the Hawks-Gordhan saga.”
The rand’s retreat against the dollar last month was the worst performance among 31 major and emerging market currencies tracked by Bloomberg. While the rand has dropped in August for 16 of the last 20 years, it has advanced in September 12 times in the past two decades. Yields on benchmark government bonds due December 2026 dropped 3 basis points to 9.04 percent after rising 42 basis points in August.
The Bloomberg Commodity Index rebounded from a three-week low, gaining for the first day in seven as figures showed China’s manufacturing purchasing managers index rose last month to the highest in almost two years, suggesting stabilisation in the world’s second-biggest economy.
BLOOMBERG