South Africa's rand recovering from budget shock, stocks lift * Mareeg.com somalia, World News and Opinion.
Mareeg Media
Somalia

South Africa’s rand recovering from budget shock, stocks lift

JOHANNESBURG (Reuters) – South Africa’s rand clawed back ground against the dollar on Monday, benefiting from a pause in the greenback’s rally and a technical retracement of the previous week’s plunge to 11-month lows as the shock of last week’s bleak budget wore off.

Stocks lifted with banking shares rebounding after taking a knock after the budget was presented on Wednesday.

At 1430 GMT the rand was 0.27 percent firmer at 14.0700 per dollar compared to Friday’s slide to 14.3575, the currency’s weakest level since November 2016.

The rand fell more than 4 percent on Wednesday and Thursday after Finance Minister Malusi Gigaba announced a fiscal deficit forecast of 4.3 percent of GDP and slashed the growth estimate to 0.7 percent for 2017.

Bonds also suffered a sharp selloff after the budget.

The rand and bonds recovered on Monday, with traders citing profit-taking on the dollar rally as well the rand’s failing to close above 14.35 technical support mark.

“Technically the long term picture is good for dollar bulls,” said Standard Bank’s chief currency strategist Warrick Butler.

“Over the short term however, I can certainly see a pull back to 13.96 but even 13.85 as the shock and horror of our own Halloween Budget Speech starts to fade,” Butler said in a note.

The yield on the benchmark government bond due in 2026 was down 5 basis points to 9.85 percent.

On the bourse, the benchmark Top-40 index ticked up 0.14 percent to 52,479 points while the All-Share index rose 0.28 percent to 58,879 points.

Among the biggest gainers were banking stocks which benefited from a rebound after the sector was hard hit by last week’s budget speech.

Capitec Holdings rose 1.44 percent to 944.65 rand and Standard Bank added 1.22 percent 164.07 rand.

Further gains were seen from bourse heavy-weight Naspers which rose 1.27 percent to 3451.00 rand, boosted by gains from China’s Tencent Holdings, in which it holds a major stake.

Shoprite shares fell 2.27 percent to 202.77 rand after it said weaker food prices weighed on its businesses outside South Africa.

The market was also held back by technical factors, with momentum indicators tracked by some analysts suggesting that the main indices had strayed into overbought territory and could be capping further gains.

(Reporting by Mfuneko Toyana and Tanisha Heiberg; Editing by James Macharia)

Get real time updates directly on you device, subscribe now.

Comments are closed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Do NOT follow this link or you will be banned from the site!