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UPDATE 1-South Africa's rand weaker as risk appetite diminishes, stocks slip

Published 2020/07/24, 17:39
Updated 2020/07/24, 17:42
© Reuters.
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JOHANNESBURG, July 24 (Reuters) - South Africa's rand hit its weakest level in more than a week on Friday after the central bank cut interest rates on Thursday and signalled it may have reached the end of its easing cycle, and as relations between the United States and China worsened.

At 1505 GMT the rand ZAR=D3 was 0.15% weaker at 16.7000 per dollar, after falling to 16.8075 earlier - its weakest level since July 14.

The central bank's five-member monetary policy committee on Thursday voted three to two for a 25 basis-point rate cut to a record low of 3.50%. The rate cut had been expected. Botes, executive director at Peregrine Treasury Solutions in Pretoria, said the interest rate cut and U.S.-China tensions were causing some uncertainty and caution within markets.

"The rand has given up some ground on the back of the cautiousness," said Botes.

In a tit-for-tat move, China ordered the United States to shut its consulate in the city of Chengdu, after Washington's demand this week that Beijing close its Houston consulate. Johannesburg Stock Exchange (JSE) ended the week lower as a surge in virus cases globally and the U.S.-China tensions weighed heavy on the market.

The benchmark FTSE/JSE All Share Index .JALSH closed down 0.7% at 55,680 points while the FTSE/JSE Top 40 Companies Index .JTOPI slipped 0.79% to end the trading week at 51,277 points.

However, investors continued to flock to gold stocks as a safe haven with JSE's gold mining index .JGLDX , which represents top five gold miners in South Africa, up 2.63% at the end of trading on Friday. The index has gone up 8.4% since last week and 114% since the beginning of the year.

Bonds weakened, with the yield on the benchmark 2030 government issue ZAR2030= up 11 basis points to 9.230%.

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