UPDATE 1-South Africa's rand firmer, stocks drop more than 2% as power cuts disrupt

  • Reuters
  • Forex News
UPDATE 1-South Africa's rand firmer, stocks drop more than 2% as power cuts disrupt
Credit: © Reuters.

(Adds latest figures)

JOHANNESBURG, Sept 3 (Reuters) - South Africa's rand firmed on Thursday, joining fellow emerging market currencies in an advance against a weaker dollar that shielded it from domestic economic issues.

At 1500 GMT the rand ZAR=D3 was 0.58% firmer at 16.7175 per dollar compared to an overnight close of 16.8100.

The rand has struggled for momentum in recent sessions, despite global demand for risk currencies, which have been spurred by dimming hopes of a quick U.S. economic recovery and jitters heading into U.S. elections in November.

While the dollar =USD paused its slide to a 28-month low earlier this week, high-yielding units like the rand drew buyers hungry for returns. Concerns about local politics and evidence the local economy is still weak, however, have kept rand bets cautious.

Data on Thursday showed the number of new U.S. claims for unemployment benefits fell, but not enough to signal strong economic recovery. South African private sector activity contracted for the 16th straight month in August, albeit at a slower rate, as COVID-19 lockdown restrictions continued to depress demand and sentiment. third day of nationwide power cuts by state utility Eskom also restrained demand for the rand.

Bonds firmed, with the yield on the benchmark 2030 government issue ZAR2030= down 2 basis points to 9.115%.

In the equity market, Eskom's accelerated power cuts drove stocks lower. Mining and retail firms often cite power cuts as a risk to trading.

Furniture retailer Lewis Group LEWJ.J led the decliners, sinking 7.67%. Gold miners also fell due to weaker bullion prices. The gold index .JGLDX closed 0.49% lower.

The Johannesburg all-share index .JALSH fell 2.4% to 54,522 points while the Top-40 index .JTOPI declined 2.63%.

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