JOHANNESBURG – South Africa’s rand held its gains of the previous week against the dollar on Monday as the latest bout of U.S. political turmoil kept the greenback on the back foot.
Stocks were flat, led lower by Pioneer Foods which posted a drop in half year profits.
At 1500 GMT, the rand traded at 13.2200 per dollar, 0.15 percent firmer from its New York close on Friday, retreating from a session high of 13.1425.
The rand ended last week on a firmer footing as political drama in Washington threatened to derail U.S. President Donald Trump’s promises of tax reform and fiscal stimulus.
Looking ahead in the week, focus was on South African Reserve Bank’s (SARB) interest rates decision, a Moody’s country visit and the release of minutes of the U.S. central bank’s policy committee meeting.
Economists polled by Reuters anticipate South Africa’s central bank will keep rates on hold at 7 percent on Thursday.
The bank kept rates steady at its last meeting on March 30, a day before a cabinet reshuffle that saw former Finance Minister Pravin Gordhan being replaced, followed by credit ratings downgrades to “junk” by S&P Global Ratings and Fitch.
“The rand’s performance has proved somewhat volatile ever since, thanks mainly to domestic political uncertainty and, more recently, shaky politics creeping back in the U.S. and Brazil,” said BNP Paribas Securities South Africa senior economist Jeffrey Schultz.
“The SARB is likely to continue to caution over the sustainability of the currency’s performance given the above uncertainties.”
In fixed income, government bonds firmed with the yield for the benchmark instrument due in 2026 falling 5 basis points to 8.625 percent.
On the bourse, the benchmark Top-40 index ticked up 0.09 percent to 48,005 points while the All-Share index lifted 0.16 percent to 54,517 points.
The biggest faller on the bourse, Pioneer Foods dropped 4.38 percent to 153.00 rand after it reported a 47 percent drop in half year earnings on the back of higher maize prices impacting their essential foods and grocery divisions. [nL8N1IO2GV]
“People are disappointed that those numbers weren’t better,” Cratos Capital equities trader Greg Davies said.
