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South Africa's rand recovering, stocks falter on local economic pressure
* Rand steady a EM contagion panic eases
* Stocks weaker as economic woes weigh
(Adds latest figures, analysts comments)
JOHANNESBURG, Sept 10 (Reuters) - South Africa's rand
stretched its recovery to a third straight session on Monday,
climbing further off two-year lows hit last week as investors
saw an opportunity to buy the currency cheaply while the
dollar's rally paused.
At 1410 GMT the rand was 0.2 percent firmer at
15.2100 per dollar, having opened slightly lower but firming
throughout the session as a short-squeeze continued in the wake
of last week's large drop on data showing the economy
Technical indicators also suggested the rand, along with
other emerging currencies, was oversold and due a small
correction with much of last week's panic over contagion from
Argentina and Turkey easing.
"In the absence of clear-cut signals or direction, the
USD-ZAR will likely remain largely range bound, although given
the oversold nature of emerging market currencies, the potential
to regain some resilience should not be underestimated," said
analysts at Investec.
The currency will however remain vulnerable to offshore
events such as higher interest rates in the United States and
the simmering trade spat between Washington and Beijing, which
was stoked by President Donald Trump saying on Friday he was
ready to slap tariffs on virtually all Chinese imports.
"The rand is the most sensitive emerging-market (EM)
currency in the world and is used as a proxy trade in a risk-on
or risk-off environment," strategist at Nedbank Mehul Daya wrote
in a note, adding that 15.02 could provide the next pivot point.
Bonds remained pressured by the overall weaker currency and
elevated credit downgrade risk, with the yield on the benchmark
2026 paper up 10 basis points to 9.24 percent.
Stocks were weaker, with the Johannesburg Stock Exchange's
Top-40 index sliding 0.52 percent to 50,570 points, and
the broader All-Share index down 0.6 percent to 56,734
Health group Netcare and fashion retailer Foschini
led the decliners on the Top-40, both down around 3.5
General retailers, banks and grocers - the so-called SA Inc.
stocks for their exposure to local economic conditions - were on
South Africa's economy has slipped into recession for the
first time in nearly a decade, with data last Tuesday showing
gross domestic product contracted for two quarters in a row, due
mainly to a sharp fall in agriculture.
The general retailers index was down 1.56 percent,
while the banking index was fell 0.64 percent on the
(Reporting by Mfuneko Toyana; editing by John Stonestreet and
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