JOHANNESBURG - The rand slumped to a one week-low yesterday as a lack of momentum to push the currency beyond a recent milestone and fears of global trade war spurred investors to buy dollars.
At 5pm, the rand bid at R11.8266 to the dollar, 5.22cents softer than at the same time on Wednesday, having started the day steady around R11.70 before traders began eyeing short dollar positions as New York trade commenced.
“The rand has been extremely flat. We’ve seen moves mostly between 11.60 and 11.90. Our view is purchasing dollars for anything below 12 rand is a massive discount, considering the fair value is closer to 12.85,” said strategist at Peregrine Treasury, Bianca Botes.
The rand crossed the threshold of 12 to the dollar on March2.
The onset of risk off sentiment as investors looked ahead to the US Federal Reserve’s policy meeting next week, where the bank is expected to raise interest rates, saw traders positioning for a greenback rally close rand positions.
The dollar index rose 0.26percent. As a result commodity prices fell, with gold, platinum and copper all down about 0.5percent.
In fixed income, the yield for the benchmark government bond due in 2026 rose 5 basis points to 8.125percent.
In the equities market, the JSE all share index continued to slide, owing to the continued decline in entertainment and technology firm Naspers, which fell 2.05percent to R3465.50.
The index was down 0.38percent to 5820.773 points. The Top40 index weakened for the third consecutive session, falling 0.34percent to 51613.14 points.
PPC was down 6.59percent to R7.23 after it announced yesterday a R2.1billion black empowerment top-up scheme that will give employees a 10percent shareholding in the South African business.
“BEE (black economic empowerment) deals do mean that some money has to be spent and some restructuring has to happen. That is not always positive in the short-term, so often times pressure does come onto the stocks,” said Independent Securities trader, Michele Santangelo.
Information Technology company EOH continued to slid from the previous session after flagging an up to 25percent decline in half-year headline earnings per share. It lost 11.76percent down R52.50.
-REUTERS