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South African rand inches higher in low volumes, stocks also gain

Credit: REUTERS/THOMAS WHITE

South Africa's rand edged up in subdued trading on Monday as a global surge in coronavirus infections put the brakes on demand spurred by hopes that the European Union would agree on a recovery fund to rescue the worst hit members of the union.

(Adds latest details)

JOHANNESBURG, July 20 (Reuters) - South Africa's rand edged up in subdued trading on Monday as a global surge in coronavirus infections put the brakes on demand spurred by hopes that the European Union would agree on a recovery fund to rescue the worst hit members of the union.

At 1600 GMT, the rand was 0.16% firmer at 16.6700 per dollar compared to Friday's close of 16.6975.

The European Union is set agree on a recovery fund of around 750 billion euros ($857.93 billion) for economies in the region hit by the pandemic, soothing the anxiety over persistent signs of a coronavirus surge.

More than 14 million people have been reported to be infected by the novel coronavirus globally and 595,459​ have died, according to a Reuters tally.

Locally, positive cases approached the 340,000, with nearly 5,000 deaths.

Investors demand for yield has been restrained by the upcoming lending rates decision on Thursday.

"With consensus flip flopping over whether a rate cut will materialise at the MPC meeting this week, there may be some pressure for renewed rand depreciation," said Investec's chief economist Annabel Bishop. A Reuters poll last week found 13 of 28 economists expected a 25 basis point cut and two expected 50 basis points to 3.25%. 13 said the bank would leave rates unchanged.

"The rand could weaken somewhat on a rate cut, but is likely to still see some support thereafter on global yield-seeking," Bishop added in a note.

Bonds ended flat, with the yield on the benchmark 2030 paper unchanged at 9.46%.

The Johannesburg Stock Exchange started the week on a high note tracking global markets, which gained on hopes of a coronavirus vaccine and stimulus packages across countries.

The benchmark FTSE/JSE All Share Index rose 0.63% to end the day at 56,265 points, while the FTSE/JSE Top 40 Companies Index ended up 0.65% to 51,852 points. (Reporting by Mfuneko Toyana; Editing by Amy Caren Daniel) ((mfuneko.toyana@thomsonreuters.com; +27117753153; Reuters Messaging: mfuneko.toyana.thomsonreuters.com@reuters.net)) Keywords: SAFRICA MARKETS/ (UPDATE 1)

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