S.Africa rand gives way vs dlr, stocks bounce back
By Stella Mapenzauswa and Gugulakhe Lourie JOHANNESBURG (Reuters) - South Africa's rand yielded further ground against the dollar on Thursday, weakening more than 1.7 percent to a two-week low as U.S. data pointed to a recovery in the world's biggest economy, boosting the greenback. Resource-heavy stocks bounced back as investors picked up recently-battered shares, now at bargain prices. At 1627 GMT the rand traded at 6.8037 against the dollar after earlier touching a session low of 6.8160 -- its weakest level since December 22 -- from Wednesday's close at 6.6950. The dollar moved higher against the euro, which the rand tends to track, bolstered by generally upbeat data showing the U.S. economic recovery was well underway. "That should put a bit of a strain on the rand although it's still doing remarkably well considering where we were last year this time," Bidvest Bank chief dealer Ion de Vleeschauwer said. "The rand remains strong against the euro and the pound and everything else." But he added: "It's a bit worrisome for the central bank that although they've tried to talk the rand weaker, the opposite is happening." The rand has lost 2.5 percent against the dollar this week, but is still up 8 percent since the start of 2010. Its gains have raised worries about the competitiveness of manufacturers. The central bank tried with little success to stem rand strength in 2010 by quickening its pace of foreign currency reserves accumulation. Data on Friday morning will give clues on how aggressively it intervened in December. "It's got to come to some sort of point where they've got to put their money where their mouth is and do something to weaken the currency," de Vleeschauwer said. Analysts say rand strength gives the Reserve Bank scope to cut rates further on January 20, adding to 650 basis points of cuts between December 2008 and November last year. On Thursday the JSE Top-40 index of blue chips was up 0.37 percent to 28,608.82, while the broader All-share index gained 0.33 percent to 32,115.88. "It's probably a bounce from yesterday's sell-off," said Abri du Plessis, chief investment officer at Gryphon Asset Management. Shares that were hit hard on Wednesday rose, with Anglo-South African insurer Old Mutual up 2.08 percent to 13.27 rand and Swiss luxury goods maker Richemont's Johannesburg-listed shares rising 1.89 percent to 38.33 rand. BHP Billiton climbed 1.56 percent to 266.31 rand and miner Exxaro was up 1.52 percent to 146.50 rand. Consumer goods firm Tiger Brands, due to trade without a dividend on Monday, increased 1.08 percent to 197 rand. But AngloGold Ashanti and Harmony Gold dropped 0.48 percent to 312.50 rand and 0.43 percent to 79.51 rand, respectively. Government bonds weakened alongside the rand and the yield on the benchmark 2015 bond added 7.5 basis points to 7.265 percent. The yiels on the 2026 note was up 9 basis points at 8.24 percent. Thu, 06 Jan 2011
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