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Politics weighs on South Africa's rand, stocks

Credit: REUTERS/ROGAN WARD

South Africa's rand weakened against the dollar on Wednesday, extending earlier losses after mixed local data and the anti-graft ombudsman's calls for President Cyril Ramaphosa to respond to findings from an investigation into a bribe scandal.

Updates prices, adds context, stocks

JOHANNESBURG, June 12 (Reuters) - South Africa's rand weakened against the dollar on Wednesday, extending earlier losses after mixed local data and the anti-graft ombudsman's calls for President Cyril Ramaphosa to respond to findings from an investigation into a bribe scandal.

At 1523 GMT, the rand ZAR=D3 was almost 1% weaker at 14.8200 per dollar compared to a close of 14.6750 overnight in New York.

The rand struggled while other emerging market currencies including Brazil's real BRL= and the Mexican peso MXN= were benefiting from hopes the Federal Reserve would raise interest rates after data showed U.S. inflation was barely changed in May.

Although South African retail sales data published on Wednesday showed a pick-up in sales growth in April, retail inflation fell below its March level reflecting a constrained spending environment, also highlighted by the Bureau for Economic Research in its business confidence index for the second quarter, Investec said in a note.

Meanwhile, an investigation into a campaign donation received by Ramaphosa from a company implicated in graft hit the headlines after publication of a letter in which the anti-graft watchdog explains Ramaphosa has until June 21 to respond to the preliminary findings of the investigation, which will be finalised after he does so.

Ramaphosa's office said in a statement on Wednesday on its website that he remained committed to fully cooperating with the investigation and ensuring it was swiftly concluded.

"We expect the uncertainty about the impact of Mkhwebane's investigation on Ramaphosa's reform drive to continue to weigh on the rand in the next few days, with the USD/ZAR potentially surpassing the 14.88 resistance level," Juri Kren, of Continuum Economics, said in a note.

Stocks were also down after the United States took a tough line on trade talks with China, triggering a dip in global equities.

The Johannesburg Stock Exchange's benchmark Top-40 Index .JTOPI fell 0.07% to 52,619.43 points while the broader All-Share Index .JALSH dipped 0.1% to 58,706.35 points.

Tobacco company British American Tobacco BTIJ.J was among the biggest losers on the blue-chip index, dropping 3.12% to a 17.85 rand share price after warning of steeper sales declines globally due to waning demand for tobacco.

The weak rand also hurt financials, with major lender Nedbank NEDJ.J down 2.03% to a 259.12 rand and Rand Merchant Bank Holdings RMHJ.J closing 1.85% lower at 82.65 rand.

(Reporting by Mfuneko Toyana, Emma Rumney and Naledi Mashishi Editing by Andrew Cawthorne and Frances Kerry)

((mfuneko.toyana@thomsonreuters.com; +27117753153; Reuters Messaging: mfuneko.toyana.thomsonreuters.com@reuters.net))

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