STANBANK: 18,368 -162 (-0.87%)
S.Africa's rand surrenders brief gains to resurgent dollar, stocks slide
* Rand slides more than 1 pct as EM bulls balk exit
* Stocks dragged lower by risk-off sentiment
(Updates with closing figures)
JOHANNESBURG, May 17 (Reuters) - South Africa's rand
weakened early on Thursday, giving up the previous session's
gains as investors short on the local and other emerging
currencies were squeezed out of those positions by a swift,
albeit brief turnaround in the Turkish lira.
Stocks weakened, led lower by banking shares, as global
appetite for emerging markets dwindled.
At 1705 GMT the rand was 0.88 percent weaker at
12.5550 per dollar, having rallied to 12.40 on Wednesday,
spurred by a broad emerging market relief rally after Turkey's
central bank said it would act to stem a selloff in the
"With yesterday's rand rally, what we were seeing was a bit
of volume flushing the market," said currency strategist at
Peregrine Treasury Solutions Bianca Botes.
The relief offered by the Turkish lira stoked a short
squeeze as the 12.40/$ level, used as a stop-loss mark by some
investors, triggering a brief wave of selling as rand bears wary
of a run to 12.20 closed positions.
The rand traded as firm as 12.1800 on Monday, its strongest
in three weeks, but quickly lost ground to geopolitical worries
over Iran as well as the Israeli-Palestinian conflict, and
general risk aversion in anticipation of rate hikes by the U.S.
"We saw the rand rally all the way down to around 12.20 and,
in my opinion, that's a very unrealistic level, considering
where the country is from a global and a local perspective,"
The rand has also been undermined by a large exit from
dollar-funded carry trades, with high-yield currencies such as
the Mexican peso and the Russian rouble also
Bonds were weaker, with the benchmark paper due in 2026
yielding 8.51 percent, 4.5 basis points higher.
On the bourse, the benchmark Top-40 index closed
down 0.83 percent at 51,675 points while the All-Share index
fell 0.75 percent to 58,184 points.
Banking shares were down 3.18 percent, with Capitec
down 2.61 percent to 826.73 rand and Standard Bank
3.66 percent weaker at 203.02 rand.
"Foreign investors have been a little bit less favourable to
South African shares for the last week or so," said Cratos
Capital equities trader Greg Davies.
(Reporting by Mfuneko Toyana and Tanisha Heiberg; Editing by
First Published: 2018-05-17 16:09:17
Updated 2018-05-17 17:44:39
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