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Africa, Forex

South Africa’s rand slips to 10-week low, stocks continue bull run

(Updates prices)

JOHANNESBURG, Aug 6 (Reuters) – South Africa’s rand fell to its lowest in 10 weeks on Thursday, as investors’ risk appetite dwindled and the dollar found some support after data showed U.S. jobless claims fell slightly in the latest week.

At 1523 GMT, the rand was 1.18% weaker at 17.5350 per dollar, after hitting a session low of 17.6650, its weakest since May 29.

The dollar strengthened after data showed the number of Americans seeking jobless benefits fell last week.

Fears that economic recovery across major economies are diverging have been playing out in currency markets, with the dollar’s two-year supremacy at risk.

The rand has failed to benefit from the dollar’s decline, though, with investors sitting on the fence.

Economists at ETM Analytics said this might to some degree be a function of South Africa’s own risks.

The country has Africa’s highest number of COVID-19 cases at more than 500,000, and was already in an economic recession before the pandemic struck. The country is likely to see a slower recovery than its emerging-market peers, reducing demand for the rand.

The Johannesburg Stock Exchange continued its bull run backed by a commodity-led rally and ahead of a fiscal aid package to be announced in the United States.

The FTSE/JSE All Share Index rose 0.05% to end the day at 57,657 points while the FTSE/JSE Top 40 Companies Index rose to an almost two-year high in intraday trading before ending the day up 0.13% to 53,351 points.

The banks continued to underperform the broader market with the JSE banking index down 0.41%.

Bonds gained, with the yield on the benchmark 2030 bond down 3.5 basis points at 9.290%. (Reporting by Olivia Kumwenda-Mtambo and Promit Mukherjee. Editing by Jane Merriman)

New South African bank notes featuring an image of former South African President Nelson Mandela are displayed at an office in Johannesburg

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