UPDATE 1-South Africa's rand retreats from one-year high, stocks gain

  • Reuters
  • Forex News
UPDATE 1-South Africa's rand retreats from one-year high, stocks gain
Credit: © Reuters.

(Update prices)

JOHANNESBURG, Feb 16 (Reuters) - South Africa's rand fell on Tuesday, pulling back from a one-year high touched earlier in the session, as Citigroup Inc (NYSE: C ) C.N said it was booking profits from the currency.

At 1500 GMT, the rand ZAR=D3 was 0.83% weaker at 14.5950 per dollar, having earlier reached a one-year high of 14.4050, as renewed investor risk appetite and an upswing in commodity prices shielded the currency from fears of fiscal deterioration.

Citi said on Tuesday it was booking a profit in its three-month bet on the South African rand versus the U.S. dollar. has been an extraordinary performance in the ZAR, strongly supported by residual current account rebalancing forces, solid metal and mining terms of trade trends, and a sense of reflation and cyclically in global macro investment trends," Luis Costa, emerging markets strategist at Citi, wrote in a research note.

"But not everything is rosy. There is a point at which the underlying very weak growth trend and its fiscal implications could start impacting the ZAR in a negative way."

South African Finance Minister Tito Mboweni will present his 2021 budget on Feb. 24. The budget is expected to crystallise the country's gaping budget deficit and debt burden.

The economy was in recession even before the COVID-19 pandemic, which only exacerbated its problems.

Shares continued to build over their record highs on global economic recovery optimism, but a poor show by retailers and gold and platinum mining companies kept the gains subdued.

The benchmark all-share index .JALSH closed up 0.15% to 67,227 points while the blue-chip top-40 companies index closed up 0.16% to 61,775 points.

Shares in South African retailer SPAR SPPJ.J fell by more than 7% after the group said its sales for the 18 weeks that ended Jan. 29 were hit by an alcohol ban from the end of December. Shares in other retailers followed suit and recorded a fall.

Platinum and gold mining companies also shed gains as the price of both the commodities weakened through the day.

Bonds weakened, with the yield on the benchmark 2030 government issue ZAR2030= up 5.5 basis point to 8.625%.

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