UPDATE 1-South African rand bounces back after steep sell-off

  • Reuters
  • Forex News
UPDATE 1-South African rand bounces back after steep sell-off
Credit: © Reuters.

(Updates throughout)

JOHANNESBURG, Aug 15 (Reuters) - The South African rand ZAR=D3 gained more than 1 percent against the dollar on Thursday, pulling back from a steep sell-off as worries about the global economy eased slightly.

The rand has been on a torrid run this month, losing around 6 percent against the U.S. currency on a dismal domestic growth outlook and fears the United States could tip into recession over its trade war with China.

The rand traded at 15.25 versus the dollar by 1630 GMT, around 1.2 percent stronger than its previous close, after higher-than-expected U.S. retail sales data. international investors use the South African currency as a proxy for emerging market risk, making it highly susceptible to swings in sentiment on global markets.

Some traders said the recovery in the rand was likely to be short-lived, given grave concerns about the country's debt trajectory and the sluggish pace of economic reform.

A senior International Monetary Fund representative said on Thursday that South Africa's public debt was reaching "uncomfortable" levels. the Johannesburg bourse, stocks recovered some ground lost earlier in the day but still closed weaker, with investors averse to risk a day after an inversion of the U.S. Treasury bond yield curve, a sign some investors see as a harbinger of recession in the world's largest economy. Johannesburg Stock Exchange's All-Share index .JASLH lost 0.35% to 53,841 points and the benchmark Top-40 .JTOPI was down 0.33% to 48,117 points.

Bullion producer Gold Fields GFIJ.J led the declines on the blue-chip index, slipping 9.76% to 80.98 rand after it reported a lower than expected increase in half-year profits. miners Anglo American (LON: AAL ) Platinum AMSJ.J and Anglo American AGLJ.J fell 3.79% to 812.12 rand and 3.49% to 313.18 rand, respectively. South African paper and pulp maker Sappi SAPJ.J lost 2.56% to 42.68 rand.

The banking index .JBANK rose 3.55% to 8,340 points. Insurer Discovery DSYJ.J closed up 5.26% to 105.91 rand, while Standard Bank SBKJ.J increased 4.58% to 173.50 rand and Absa ABGJ.J rose 4.03% to 152.07 rand.

"Shares are trading at levels that we've last seen - in valuation levels - 10 years ago," said FNB Wealth and Investments portfolio manager Wayne McCurrie. "They're cheaper than what they were in the teeth of the financial crisis."

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or