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Asia, Forex

S.Africa’s rand falls as focus shifts to budget, Liberty Two Degrees leads stocks higher

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JOHANNESBURG, Feb 19 (Reuters) – South Africa’s rand weakened on Friday afternoon in increasingly cautious trade ahead of the budget speech next week, which will give the government’s outlook on the economy and public finances.

At 1500 GMT, the rand was 0.58% weaker at 14.6600 per dollar, despite a slide in the greenback against other currencies after disappointing employment data dimmed hopes of a rapid recovery in the world’s top economy.

Bonds also inched lower, with the yield on the benchmark 2030 government issue up 12 basis points to 8.885%.

The rand’s rally so far in 2021 to a one-year high has largely been driven by offshore events, with expansive stimulus policies in the United States and other developed economies, as well as the roll-out of COVID-19 vaccines, driving global risk demand.

That optimism has dimmed in recent sessions with investors looking to book profits and wait for the next catalyst. Locally, the budget speech due to be delivered by Finance Minister Tito Mboweni on Feb. 24 has led to further caution.

“Next week the key event in the domestic market is the 2021 budget with markets hoping for no further deterioration in fiscal metrics,” Kamilla Kaplan of Investec said in a note.

Recent data has shown better-than-expected economic activity and revenue collection at the end of 2020, while slowing COVID-19 infections and the roll-out of vaccines have soothed sentiment.

South African shares climbed to near record highs on improved earnings forecasts as well as higher commodity prices. The Top-40 index ended 1.47% firmer at 62,105 points, close to a record high of 62,271 hit on Tuesday, while the Johannesburg All-share index rose 1.34% to 67,464 points.

The second biggest gainer on the all-share index was Liberty Two Degrees, jumping 12.79%, it’s biggest daily climb in eight months, after the owner of Sandton City mall said it now expects its annual distributable earnings to fall by between 44% and 49%, rather than its previous forecast made in November for a decline of between 55% and 65%.

Building materials retailer Cashbuild rose 2.04% after it also revised the estimated rise in its half-year headline earnings per share to between 100% and 105% from 100%.

Miner Harmony Gold climbed 1.76% after flagging a rise in interim earnings of as much as 219%.

(Reporting by Mfuneko Toyana, Olivia Kumwenda-Mtambo and Nqobile Dludla; Editing by Susan Fenton)

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