* Rand rallies briefly before retreating back to ranges
* Stocks flat as Steinhoff extends losses
(Adds latest prices, analyst quotes)
JOHANNESBURG, Jan 9 (Reuters) - South Africa's rand
strengthened on Tuesday, touching its highest level in two
sessions, after rumours that President Jacob Zuma had stepped
down spurred a temporary rally in the currency against the
Stocks were little changed with South African-listed
Steinhoff shares weighing on the market.
At 1430 GMT, the rand was up 0.28 percent to
12.3500 against the dollar from a close of 12.3800 overnight in
The currency reached 12.2775, gaining around 1 percent,
earlier in the session before quickly retreating to above 12.30.
"The Zuma trigger today gives a glimpse of how the rand will
react if Zuma does step down early, although this possibility is
increasingly being priced in," said Christopher Shiells, a
senior emerging market analyst at Informa Global Markets.
On Sunday parliament said it would meet this week and review
its rules relating to removing the country's president, after
the constitutional court said on Dec. 29 lawmakers had
previously failed to hold Zuma to account, further fuelling
rumours of an early exit for the 75-year-old leader
The ANC's top decision makers also meet this week, and
Zuma's recall is expected to be on the agenda.
The rand has gained around 8 percent as investors bet Deputy
President Cyril Ramaphosa's election as leader of the ruling
African National Congress would push through business-friendly
"We believe that the rand's rally is looking overstretched
given that South Africa’s idiosyncratic risks did not end with
Ramaphosa's victory. It is for this reason that we are
maintaining a cautious stance on the rand and government bonds
for 2018," Shiells said.
Bonds tracked the firmer currency, with yield on the
benchmark paper due in 2026 down 0.5 basis points at
On the bourse, the benchmark Top-40 index rose 0.1
percent to 53,184 points and the All-Share index gained
0.13 percent to 60,114 points.
Steinhoff fell 13.02 percent to 7.55 rand after the
European Central Bank said on Monday it had sold its bonds of
the scandal-hit company, potentially suffering a loss of up to
55 percent on that investment.
Further losses came from the bullion sector, which
fell 2.46 percent as a firmer dollar weighed on gold prices.
Gold Fields fell 3.08 percent to 52.00 rand and
AngloGold Ashanti was 2.34 percent lower at 128.83
(Reporting by Mfuneko Toyana and Tanisha Heiberg; Editing by
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