S.Africa's rand firms but seen lower; stocks flat

By Xola Potelwa and Gugulakhe Lourie

JOHANNESBURG (Reuters) - South Africa's rand traded firmer against the dollar on Monday, taking a breather from recent multi-month lows, while stocks retreated after recent gains as investors took profits.

The JSE Top-40 index of blue chips was down 0.33 percent to 29.621.70 and technical levels show the index has limited upside. Its 14-day relative strength index is around 60.

At 1544 GMT, the rand was up 0.36 percent at 7.2390 to the dollar, from a close of 7.2650 on Friday.

"On the topside is 7.33 if that goes we'll probably see 7.36, but we're struggling to go above 7.30, there are exporters holding it around the 7.30 level," a local dealer said.

The rand has pierced the strong 7.30 technical level twice last week.

Dealers however expected the rand to continue its recent poor performance since reported central bank intervention in the market.

Analysts say the South African Reserve Bank (SARB) has stepped up its foreign reserves accumulation in recent weeks in a bid to stem gains on the rand.

Data from the SARB this morning shows the country's gross reserves rose by $1.6 billion at end January, while currency reserves were up $1.9 billion, pointing to increased dollar-buying by the Bank.

The rand has gained over 28 percent since the beginning of 2009. Reserve Bank Governor Gill Marcus however says their efforts seem to have had little effect.

"The appreciation of the rand exchange rate has occurred despite the continued purchase of foreign exchange by the Reserve Bank and the National Treasury," Marcus said in a speech posted on the Bank's website.

Government bonds ended with the yield on the benchmark 2015 note at 7.885 percent from Friday's close of 7.91 percent. The 2026 issue closed at 8.67 percent compared with 8.69 on Friday.

On Tuesday the market looks to the quarterly unemployment rate for the last quarter of 2010. Previous data showed the jobless rate was at 25.3 percent of the labor force.

SARB Governor Gill Marcus has said current growth rates are insufficient to make significant inroads into the unemployment rate.

Also on the local calendar this week manufacturing data for December, which is expected to have slowed from the previous month partly on the strength of the rand exchange rate.

BOURSE LOSES MOMENTUM

On the bourse, the broader All-share index dropped 0.31 percent to 32,800.23, after it surged to a 2-1/2-year high in the session pushed by firmer commodity prices.

"A bit of a breather to the downside and consolidation after heavy gains," said Wilmar Buys, a trader at FFO Securities.

Recent gainers such Vodacom, South Africa's largest mobile phone operator, fell 2.89 percent to 75 rand and Standard Bank lost 2.28 percent to 103.99 rand after recent gains.

Petrochemicals Sasol dropped 2.59 percent to 371.15 rand and MTN was down 2.39 percent to 127.45 rand.

Papermaker Mondi rose 1.62 percent to 60.97 rand after the company said its Poland unit will buy local energy firm Saturn Management for 28.8 million euro.

Bourse and mining heavyweight Anglo American gained 1.48 percent to 393 rand, on firmer commodity prices.

Mon, 07 Feb 2011

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