JOHANNESBURG– South Africa’s rand raced to its firmest in more than 15 months against the dollar on Tuesday, helped by improved risk appetite and jobs data suggesting the economy is improving.
Stocks were weaker, as the main bourse was dragged lower by miner Kumba Iron Ore after the company said it was still not in a position to pay shareholders a dividend despite seeing a doubling in earnings.
By 1600 GMT the rand had gained 0.9 percent to 13.2275 per dollar, having reached its strongest since Oct. 23, 2015, according to Thomson Reuters data, after closing at 13.3400 overnight in New York.
“It’s really a technical move and a continuation of recent momentum. There’s been pressure for a while on the dollar/rand to break lower and now it’s happened,” said Jim Bryson, currency trader at Rand Merchant Bank.
“Now we need to see a close at around 12.90 to confirm the move and maybe see the rand strengthen further.”
The rand kicked off local trade on the front foot as the dollar came under pressure after the resignation of U.S. National Security Adviser Michael Flynn. It made further gains as South Africa’s unemployment rate pulled back from its highest in 13 years.
Technical and momentum indicators point to the rand extending the rally after struggling to break short-term resistance around 13.40 for the past two weeks, although it remains vulnerable to swings in global sentiment.
A Reuters poll of 39 strategists last week saw the rand weakening around 8 percent in 2016 as the government struggles to keep public spending down, and as rates are expected to rise in the United States.
On the bourse, the benchmark Top-40 index fell 1.1 percent to 45,437 points while the All-Share index dropped 0.93 percent to 52,957 points.
Kumba Iron Ore, a unit of Anglo American, fell 7.16 percent by the close after announcing it would hold off on paying a dividend because of a volatile market outlook.
“The market doesn’t like that because it means there’s nothing in it for them for the next six months to a year,” Independent Securities trader Ryan Woods said.
Among the biggest fallers were Northam Platinum which tumbled 5.88 percent to 51.06 rand, ArcelorMittal which fell 3.17 percent to 13.75 percent and Impala Platinum which dropped 2.97 percent to 52.89 rand.
In fixed income, bonds were firmer with the yield on the benchmark government issue due in 2026 shedding 10.5 basis points to 8.625 percent.
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