South African rand firms in volatile trade, stocks fall

An illegal currency trader holds a wad of Zimbabwean bond notes and South African rand outside a bank in Harare, Zimbabwe February 24, 2017. REUTERS/Philimon Bulawayo/File Photo

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JOHANNESBURG, Jan 14 (Reuters) – The South African rand strengthened on Friday but lost some of its early gains as the dollar regained ground.

Investor sentiment and trade movements have been on a rollercoaster ride since the start of the year amid uncertainty about the extent and timing of likely US monetary tightening.

After less hawkish comments from Federal Reserve Chairman Jerome Powell and U.S. unemployment numbers broadly in line with expectations put pressure on the dollar, Fed Governor Lael Brainard signaled Thursday that rates would rise in March, helping the U.S. currency climb higher. Read more

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At 15:40 GMT, the rand was trading at 15.3579 against the dollar, up 0.27% from its previous close, but in volatile trading.

The dollar was on track to snap a three-day losing streak against a basket of currencies on Friday. Read more

“The South African rand has thrived against the US dollar since late November 2021, but that may be coming to an end with the Federal Reserve adding to its already hawkish narrative – favoring a ‘buy the dip’ approach,” Warren Venketas, analyst at DailyFX, said in a note.

He said the rand’s rally could end as the weak South African economic and political backdrop takes its toll.

The South African stock market finished weaker, trailing global markets as banks, financials, mining and industrials lost much of their gains in recent days.

The benchmark all-stock index (.JALSH) fell 1.01% to 75,160 points and the blue-chip index of the top 40 companies (.JTOPI) ended down 1.07% to 68,448 points. .

But the indices were still up nearly 1.6% over the week, thanks to a strong midweek rise in technology stocks, commodities and banks.

The price of the benchmark 2030 government bond rose on Friday, with the yield falling 0.5 basis points to 9.365%.

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Reporting by Promit Mukherjee Editing by Gareth Jones and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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