S.Africa`s rand weaker as rising Asian coronavirus cases dent risk demand

Published: 2021-05-17 tag: africa

JOHANNESBURG, May 17 (Reuters) - South Africa's rand firmed against the dollar in afternoon trade on Monday, recovering from losses earlier in the session as fears of a new wave of COVID-19 infections in Asia dampened demand for emerging market currencies.

At 1500 GMT the rand was 0.21% firmer at 14.1050. The currency had earlier in the day weakened to a session low of 14.1850.

There was mixed trade in the rand in the previous week, breaking below the key 14.00 technical on its way to a 16-month best before retreating as fears over a return of inflation in the United States sparked worries about higher lending rates there.

Caution ahead of a local decision on interest rates, due on Thursday, and consumer price-growth figures before that, have also limited rand gains.

In a poll by Reuters last week, all 25 economists surveyed see the Monetary Policy Committee (MPC) of South Africa's Reserve Bank (SARB) keeping its repo rate unchanged for a fifth straight meeting at a record low 3.5%.

"Our focus will be on the SARB's updated economic forecast and guidance regarding the prospects of monetary policy normalization," said Credit Suisse analyst Alexey Pogorelov.

"In our view, the backdrop in the domestic economy could allow the MPC to push back policy normalization, unlike the external environment, which may be in favour of early policy tightening by major developed central banks."

On the bourse, stocks firmed, boosted by gold shares, despite a pause in global markets as demand for riskier assets softened.

The benchmark all-share index (.JALSH) closed up 0.93% at 67,217 points while the blue-chip index of top 40 companies (.JTOPI) ended up 1.02% at 61,193 points.

Gold stocks soared, driven by a firmer bullion price which hit a 3-1/2-month high, with Harmony Gold (HARJ.J) up 10.13% and Gold Fields (GFIJ.J) 5.44% stronger.

Curbing further gains, Redefine Properties (RDFJ.J) closed down 4.36% after reporting a drop in half-year headline earnings.

Government bonds weakened, with the yield on the benchmark instrument due in 2030 rising by 2.5 basis points to 9.13%.

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