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Africa, Forex

South African rand slides as holds rates; stocks march on

(Updates rand after SARB decision, adds stocks)

JOHANNESBURG, July 22 (Reuters) – South Africa’s rand slid on Thursday as the central bank held interest rates and suggested monetary policy was likely to stay accommodative for a long time, and jobless claims data in the United States deterred risk-taking.

At 1650 GMT, the rand traded at 14.7350 against the dollar, around 1.3% weaker than its previous close of 14.5400.

The South African Reserve Bank’s decision to keep the repo rate at 3.5% was in line with a Reuters poll published last week and the sixth time the bank had held rates in a row.

That marks a divergence from some other emerging market central banks which have started to raise rates in response to higher inflation.

The SARB said projections in its models “reflect a highly accommodative policy stance through the end of 2022, keeping financial conditions supportive of credit demand as the economy recovers from the pandemic”.

The Johannesburg Stock Exchange (JSE) continued its forward march for the third consecutive day on Thursday as many investors brushed aside concerns over arson and looting last week that claimed over 300 lives.

“Investors are realising the economic impact of last week’s disruption is not that bad on big listed groups,” said David Shapiro, a strategist at Sasfin Securities.

A weaker local currency and strong production updates from commodity companies also helped push the market higher, he said, adding that low volumes on the JSE showed foreign participation was lacking for now.

The blue-chip index of top-40 companies closed up 1.33% at 61,309 points, and the broader All-share index ended up 1.27% at 67,404 points.

(Reporting by Alexander Winning and Promit Mukherjee, Editing by Angus MacSwan)

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