South Africa’s rand firms as dollar retreats, stocks down

05/01/2017 07:48 AST

South Africa's rand firmed on Wednesday as the US dollar fell against a basket of currencies, with investors cautious about increasing bets on the greenback before getting fresh clues on the US economy and the timing of interest rate rises.

Stocks were hit by heavily weighted rand hedges coming under pressure from a strong currency. At 1500 GMT, the rand traded at 13.6250 per dollar, 1.46 percent firmer from its New York close on Tuesday.

The dollar index -- which measures the greenback against a basket of six major rivals -- fell 0.42 percent to 102.78 , having hit a peak of 103.82 on Tuesday.

"The closer we get to Friday and the US employment data we should see the dollar momentum start to pick up again but in the meantime it's all a bit of a drag," Standard Bank head of foreign exchange spot trading Warrick Butler said in a note. On the bond market, government bonds also firmed and the yield for the benchmark instrument due in 2026 fell 4.5 basis points to 8.925 percent.

On the bourse, the benchmark Top-40 index fell 0.67 percent to 43,963 points while the All-Share index dipped 0.51 percent to 50,760 points. Rand-hedged stocks, or those that reap the bulk of their revenue outside of South Africa, led the fall as the rand gained ahead of US employment data.

"The rand is playing havoc with your dual listed stocks," said BP Bernstein trader Vasili Tirasis. Luxury goods maker Richemont fell 1.96 percent to 88.25 rand, British American Tobacco dropped 1.19 percent to 770.50 rand and BHP Billiton declined 1.92 percent to 219.50 rand Trading was slow, with a total of around 145 million shares changing hands compared with last year's daily average of 296 million.

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