UPDATE 1-South Africa rand inches firmer on U.S. stimulus hopes

  • Reuters
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UPDATE 1-South Africa rand inches firmer on U.S. stimulus hopes
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JOHANNESBURG, Oct 8 (Reuters) - South Africa's rand inched firmer in tentative trade on Thursday as renewed hope for more U.S. stimulus soothed investor sentiment toward riskier currencies.

The rand ZAR=D3 traded at 16.6300 versus the dollar at 1540 GMT, 0.3% firmer than its previous close.

"There has been a tentative improvement in risk appetite overnight after U.S. President Trump posted a number of tweets suggesting he was once again open to piecemeal fiscal stimulus measures," said economists at ETM Analytics in a note.

U.S. President Donald Trump and House Speaker Nancy Pelosi look set to pursue a stimulus package for the airline industry, though Trump halted cross-party talks for a bigger plan. no big-ticket data releases locally, the focus remains on government discussions on an economic recovery plan ahead of the medium-term budget later this month.

Monetary authorities again put the onus on the treasury to stimulate the economy. After slicing lending rates to record lows in a slew of cuts since March when the novel coronavirus hit, the central bank kept rates steady in September.

That shielded the rand from extending losses seen in the last few weeks by maintaining the high yield, or carry.

On Wednesday a deputy governor at the central bank reiterated that the regulator had done as much as it could, and would likely keep rates steady in the near-term.

In fixed income, the yield on the benchmark government bond due in 2030 ZAR2030= was 2 basis points higher at 9.555%.

The Johannesburg Stock Exchange (JSE) had a choppy day as the prospect of slow economic recovery in Africa weighed on the markets, while U.S. stimulus hopes led to some paring of losses.

The All-Share index .JALSH fell 0.36% to 54,555 points. The blue-chip Top-40 index .JTOPI slipped 0.56% to 50,131 points. The banks index .JBANK led the slide, down almost 2%.

Consumer staples and gold miners however bucked the trend.

Pick n Pay Stores PIKJ.J , the country's no.2 supermarket chain, rose 9%, while Dis-Chem DCPJ.J climbed 4.5%.

The gold miners' index .JGLDX ended over 2% higher.

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