UPDATE 1-South Africa's rand weaker after U.S. Fed holds lending rates, stocks gain

  • Reuters
  • Forex News
UPDATE 1-South Africa's rand weaker after U.S. Fed holds lending rates, stocks gain
Credit: © Reuters.

(Adds latest rand data, trader comment, stocks)

JOHANNESBURG, May 2 (Reuters) - South Africa's rand weakened on Thursday, alongside emerging markets, after the United States central bank kept benchmark lending rates unchanged, but struck a hawkish tone.

Meanwhile, an uptick in vehicle sales lifted car retailers.

At 1609 GMT the rand ZAR=D3 was 0.59 percent weaker than its New York close, at 14.54 per dollar.

The U.S. Federal Reserve on Wednesday held interest rates steady and signalled little appetite to adjust them any time soon, but with headwinds on the horizon for emerging markets, including rising oil prices and political uncertainty, investors opted to keep holding dollars. however remains focused on South Africa's election next week, with the vote set to be the most tightly contested since the end of apartheid 25 years ago and the ruling African National Congress's large majority set to narrow due to anger over unemployment and poverty.

Three polls this week showed the ANC, led by Cyril Ramaphosa, clinching a narrow majority, an outcome seen by many investors as key to the policy certainty necessary to reignite economic growth which has flat lined in the last decade. also weakened, with the yield on the benchmark 10-year government issue ZAR186= up 6 basis points to 8.610 percent.

On the bourse, stocks rose with the benchmark Top-40 index .JTOPI up 0.42 percent to 52,495.40 while the Johannesburg broader All-Share Index .JALSH closed 0.37 percent up at 58,743.56.

A 0.7 percent increase in new vehicle sales in April provided some comfort to car retailers such as Combined Motor Holdings CMHJ.J , Bidvest Group BVTJ.J and automotive group Motus holdings MTHJ.J , which rose 1.34, 2.34 and 2.25 percent respectively. and wellness group Ascendis Health ASCJ.J jumped nearly 8 percent after announcing plans to sell three businesses in its Biosciences division for 480 million rand ($33 million). It pared gains to close 1.58 percent firmer. the absence of any local news and volumes we kind of take our cue from international markets," said Avior Capital Markets trader Jacques Potgieter, adding that markets will be fairly low for the next week going into elections and likely for a week or two after.

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