World Markets

S.Africa's rand eases on weak retail sales data, monetary policy in focus

Credit: REUTERS/THOMAS WHITE

South Africa's rand eased on Wednesday on weak year-on-year retail sales data for September even as global euphoria around a coronavirus vaccine softened, making riskier currencies less attractive.

Updates rand price, adds retail sales data

JOHANNESBURG, Nov 18 (Reuters) - South Africa's rand eased on Wednesday on weak year-on-year retail sales data for September even as global euphoria around a coronavirus vaccine softened, making riskier currencies less attractive.

At 1600 GMT, the rand ZAR=D3 was trading 0.29% softer at 15.4250 per dollar, lower than its already weak morning opening as poor retail data pulled it down further.

South Africa's retail sales, which indicates consumer demand for finished goods, dropped by 2.7% in September compared with the same month a year ago, highlighting a weak pick-up in activity despite opening of the lockdown in the country.

"The hard activity data suggest that the recovery struggled to gather momentum in September," Virág Fórizsm, Africa economist for Capital Economics, said in a report.

Traders and investors, however, mostly stayed cautious ahead of the country's monetary policy review coming up on Thursday.

Analysts predict key interest rates will likely be unchanged but the South African Reserve Bank's (SARB) commentary on the extent of the impact of the coronavirus and the economic outlook beyond 2020 will be keenly watched.

On the stock market, shares gained brushing aside concerns around the poor retail sales numbers as vaccine hopes continued to lift optimism.

After Tuesday's profit-booking, the benchmark all-share index .JALSH gained 0.47% to end at 57,324 points and the blue-chip top 40 companies index closed up 0.44% at 52,518 points.

The indices are hovering just shy of their yearly highs seen first in February and then in August with industrial and financial companies reinforcing the positive momentum created by the country's banks.

Bonds also stayed firm with the yield on the benchmark 2030 government issue ZAR2030= down 1 basis point to 8.820%.

(Reporting by Mfuneko Toyana; editing by Uttaresh.V and Jonathan Oatis)

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

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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