UPDATE 1-South African rand gains against subdued dollar, stocks fall

  • Reuters
  • Forex News
UPDATE 1-South African rand gains against subdued dollar, stocks fall
Credit: © Reuters.

(Adds latest figures, analyst quotes)

JOHANNESBURG, April 19 (Reuters) - South Africa's rand strengthened on Monday, aided by the U.S. dollar being pinned near a one-month low and greater global risk appetite.

At 1500 GMT, the rand ZAR=D3 traded at 14.2500 versus the dollar, around 0.45% stronger than its previous close.

The dollar .DXY was dragged down by Treasury yields hovering near their lowest in five weeks after the U.S. Federal Reserve reiterated its view that any spike in inflation was likely to be temporary. greater risk sentiment, fuelled by expectations that monetary policy will remain accommodative the world over, sent Asian shares to a new high. it is becoming clear that loan growth is not picking up in the U.S., the bond market is starting to question the reflation trade," said currency analyst at Nedbank Neels Heyneke.

"One of the major reasons the ZAR is outperforming the other EMs is higher real rates. The other major driver is rising commodity prices driving a higher current account."

Spot gold XAU= touched its highest in nearly two months earlier, while platinum XPT= and palladium XPD= were also up on the day.

South Africa recorded large current account and trade surpluses in the last two quarters of 2020 on higher demand for commodities as global trade conditions eased with the falling COVID-19 infections and a subsequent loosening of restrictions on economic activity. dipped, as the yield on the benchmark 2030 instrument ZAR2030= rose 3 basis point to 9.09%.

Stocks fell by almost a percentage on the opening day of the week as investors globally booked some gains, and were followed suit by traders in the local market.

The benchmark FTSE/JSE all-share index .JASLH closed down 0.88% to 68,094 points. The bluechip FTSE/JSE top 40 companies index .JTOPI ended down 0.91% to 62,326 points.

But analysts said it was more of a pause than a sell-off.

"What was surprising to me was that the volumes were almost half of regular trading day volumes. It shows investors are just taking a pause," said David Shapiro, an independent market analyst.

He said there were no major factors which should induce worry despite a close to 1% drop and most investors are holding their breath as the earnings season unfold in the U.S. this week.

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