UPDATE 1-South African rand retreats from post-Fed rally, stocks edge up

  • Reuters
  • Forex News
UPDATE 1-South African rand retreats from post-Fed rally, stocks edge up
Credit: © Reuters.

(Updates rand, bonds; adds stocks)

JOHANNESBURG, March 18 (Reuters) - The South African rand fell on Thursday as spiking U.S. bond yields boosted the dollar, with the local currency giving away some gains made in the previous session after the Federal Reserve pushed back against speculation over rate hikes.

At 1500 GMT, the rand ZAR=D3 traded at 14.7525 to the dollar, 0.63% weaker than its previous close.

The Fed said on Wednesday that the U.S. economy was heading for its strongest growth in nearly 40 years, and policymakers vowed to keep interest rates low to help the economic wounds from the COVID-19 pandemic heal. now shifts to the South African Reserve Bank (SARB) monetary policy committee meeting next week.

A Reuters poll found on Thursday that the SARB will keep its repo rate at a record low of 3.5% at its March 25 meeting and at that same level until early 2022. SARB has most likely reached the end of its lowering cycle and will start moving towards a hiking cycle, albeit only from next year onwards," said Pieter du Preez at NKC African Economics.

"The slow vaccination roll-out programme, which raises the concern of a third wave of Covid-19 infections, and more intensive electricity outages remain the biggest downside risk to the economy over the short term."

In the equities market, stocks edged up, with Exxaro Resources Ltd EXXJ.J the second biggest gainer on the Top-40 .JTOPI index after the coal miner declared a bumper final dividend and a special dividend. in Exxaro closed 3.74% firmer.

Other mining stocks like Sibanye-Stillwater SSWJ.J rose 6.26% as auto-catalyst metal palladium XPD= hit a more than one-year peak on strong demand prospects amid concerns over a shortage in supply.

The Johannesburg All-Share index .JALSH rose 0.37%, while the Top-40 rose 0.39%.

Capping gains were general retailers, with the index .JGERE dipping 1.41%, a day after retail sales fell 3.5% year on year in January. the aggressive easing by the South African Reserve Bank in 2020, the retail sector continues to limp amid the ongoing pandemic crises," said FXTM Senior Research Analyst Lukman Otunuga.

Government bonds weakened, as the yield on the benchmark 2030 bond ZAR2030= rose 5 basis points to 9.42%.

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