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Africa, Forex

South Africa’s rand dips after GDP data, stock market marginally up

(Adds latest figures, analyst comments)

JOHANNESBURG, June 8 (Reuters) – South Africa’s rand dipped slightly against the dollar on Tuesday, as a recovering dollar put the brakes on the currency’s recent rally despite better-than-expected economic growth data.

At 1550 GMT the rand was 0.26% weaker at 13.5650 from a session best 13.4875 before traders pocketed gains. The rand reached a 28-month best on Friday, and had held near that level in the new week in cautious positioning ahead of key data releases.

Economic growth data showed slower activity in the first quarter compared to the last quarter of 2020, but the figure was better than expectations, limiting some currency selling. On an annualised basis, the economy grew by 4.6%, above poll expectations of 2.5%. Mining led the charge in primary sector, expanding 4.2%.

“The outlook for 2021 remains relatively encouraging. From the production side, growth will be driven mainly by mining and manufacturing, buoyed by increased global demand and elevated commodity prices,” said analysts at Nedbank.

But with the dollar edging up on the day as investors kept risk bets light with European Central Bank and U.S. inflation data due later this week, bids for the rand were limited.

Stocks on the Johannesburg Stock Exchange (JSE) ended marginally up on Tuesday as investors globally continued to toggle between inflation concerns and faster economic growth prospects.

The local stock market has largely mirrored the performance of Wall Street in the last few months, driven up by low interest rates.

However, the JSE lost some of its gains recently as concerns around a spike in U.S. inflation gripped investors with fears of an impending interest rate hike by the U.S. Federal Reserve.

The FTSE/JSE benchmark all-share index closed up 0.1% to end at 67,645 points while the blue-chip index of top 40 companies ended up 0.11% to 61,452 points.

Bonds firmed, with the yield on the benchmark government bond due in 2030 down 3.5 basis point to 8.715%. (Reporting by Mfuneko Toyana and Promit Mukherjee)

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