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South Africa's rand firms as focus shifts to Fed meeting, stocks fall

Credit: REUTERS/Thomas White

South Africa's rand firmed on Friday as domestic political concerns eased, with the focus of investors shifting to inflation data and the U.S. central bank meeting next week.

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JOHANNESBURG, June 14 (Reuters) - South Africa's rand firmed on Friday as domestic political concerns eased, with the focus of investors shifting to inflation data and the U.S. central bank meeting next week.

Stocks weakened along with global equity markets as Chinese data stoked investor anxieties over a global growth slowdown.

At 1550 GMT, the rand ZAR=D3 traded at 14.7975 per dollar, 0.5% firmer than its close on Thursday.

Domestic political uncertainty has fed investor jitters in recent days, after the main opposition party called for South Africa's graft watchdog to release a report into allegations President Cyril Ramaphosa misled parliament over a donation to his 2017 campaign to lead the ruling African National Congress party. A spokeswoman for the presidency declined to comment.

Senior ANC officials meanwhile contradicted each other over whether the party had decided to expand the South African Reserve Bank (SARB) mandate in the wake of data showing the worst economic contraction in a decade.

Bianca Botes, a Treasury partner at Peregrine Treasury Solutions, said fallout from the SARB mandate debacle seems to have settled, for now.

"With severe fluctuations in the local unit, short-term strength should be used as a buying opportunity as biases still lean towards a weaker rand by the end of 2019," Botes said.

South Africa's May consumer price inflation data is due to be released on Wednesday. The numbers will assist in setting the tone for the next interest rate decision in July.

Investors are also looking towards the U.S. Federal Open Market Committee (FOMC) meeting next week to see if the U.S. central bank's monetary policy stance matches market expectations for a near-term rate cut.

In fixed income, the yield on the benchmark government bond due in 2026 ZAR186= dipped a basis point to 8.38%.

On the bourse, the benchmark JSE Top-40 Index .JTOPI fell 0.81% to 52,166 points while the broader All-Share Index .JALSH weakened 0.86%, closing at 58,193 points.

Energy company Sasol SOLJ.J and paper and packaging company Mondi PLC MNPJ.J were the biggest losers on the blue-chip index, with Sasol down 2.06% to 357 rand, while Mondi PLC dipped 1.99% to 321.34 rand.

A rise in oil prices on Friday was not enough to lift Sasol as prices remained on track for a weekly loss on fears that trade disputes will dent global oil demand. O/R

Retailer Steinhoff SNHJ.J weakened 4.55% to 1.47 rand ahead of the publication of its delayed 2018 results on Tuesday.

On the upside, a rush to safe-haven assets like gold .XAU boosted local bullion miners like AngloGold Ashanti ANGJ.J, up 3.68% and Goldfields GFIJ.J up 1.75%.

South African markets will be closed on Monday for a public holiday.

(Reporting by Olivia Kumwenda-Mtambo and Naledi Mashishi; Editing by Alison Williams)

((Olivia.Kumwenda@thomsonreuters.com; +27 11 595 2817; Reuters Messaging: olivia.kumwenda.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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