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South Africa's rand slides to new low on strong U.S. data, stocks flat
09/01/2016 00:00:00
by Reuters

JOHANNESBURG: South Africa's rand set a new record low against the dollar on Friday as investors focused afresh on the possibility of more Federal Reserve interest rate hikes after stronger-than-expected U.S. jobs data.

Stocks inched up only slightly.

Before the release of the U.S. jobs data, the rand had gained more than half a percent as Chinese markets steadied, reviving investors' appetite for risky assets.

But the gain proved short-lived after the data, leaving the rand with its weakest ever opening week of the year.

The dollar index, which measures the greenback against a group of six currencies climbed after the stronger-than-expected data and was last up 0.5 percent at 99.792.

Emerging market assets had suffered on Thursday as traders saw a drop in the yuan as evidence of wider economic weakness in China, the world's biggest consumer of commodities.

"The rand is seriously undervalued and that we know," Nedbank Private Wealth's senior portfolio manager Graham Ledbitter.

"At the moment the dollar is rampant, and like a wine cork in a turbulent ocean we've got no control over our direction."

At 1526 GMT, the rand traded at 16.1700 to the greenback, a 0.53 percent fall after reaching an all time low of 16.2150.

Government bonds on the other hand bucked the downward trend, with the yield for the benchmark maturing in 2026 shedding 9 basis points to 9.525 percent.

On the bourse, stocks were flat with the benchmark Top-40 index inching up 0.16 percent to 43,253.30 points, while the broader All-share index was up 0.11 percent to 48,104.68 points.

Hopes in early trading that a relief rally was underway after heavy losses this week, were dashed by diversified mining firm Anglo American, said Cratos Capital equities trader Greg Davies.


Shares in Anglo dropped 3.86 percent to 55.22 rand, a 17-year low, extending its slide to nearly 20 percent so far in 2016.

ArcelorMittal South Africa moved in the opposite direction, jumping 25.28 percent to 5.65 rand after reports on Thursday that South Africa's government has extended steel import duties.

Trade on the stock market as a whole was in line with last year's daily average with 223 million shares changing hands, according to preliminary bourse data.


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