Views Article – Sharenet Wealth

Forex, News

South Africa’s rand strengthens after cenbank cuts repo rate, stocks fall

(Updates figures, adds stocks)

JOHANNESBURG, May 21 (Reuters) – South Africa’s rand rallied on Thursday after the country’s central bank cut its main lending rate by 50 basis points, while stocks fell on concerns over the long-term impact of the new coronavirus and simmering U.S.-China tensions.

At 1653 GMT, the rand was 1.57% firmer at 17.6450 per U.S. dollar after hitting 17.5100, its best level in more than a month.

The central bank cut its main lending rate by 50 basis points to 3.75% on Thursday in an effort to shield the economy from the impact of the virus. Rate cuts this year now total 275 basis points.

“With inflation expected to continue to slow in coming months, further cuts might be on the cards at the June MPC (Monetary Policy Committee) meeting as well as later in the year,” executive director at Peregrine Treasury Solutions Paul Muller said in a note.

The reappearance of tensions between the United States and China, the world’s two top economies, has capped gains however, after U.S. President Donald Trump’s attacks on Beijing’s handling of the coronavirus outbreak spooked already nervous investors.

Bonds weakened, with the yield on the government issue due in 2030 up 8.5 bps to 7.305%.

On the stock market, the benchmark JSE all-share index fell 2.15% to end at 51,023 points, while the top 40 companies index closed down 2.37% to 47,232 points.

Bullion shares fell 7.51% with Gold Fields down 6.96% and Harmony Gold 6.95% lower on the back of a weaker spot gold price. (Reporting by Tanisha Heiberg; Editing by Kirsten Donovan)

Photo illustration of South African bank notes displayed next to the American dollar notes in Johannesburg

© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.