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South Africa's rand slides as President's speech disappoints
12/02/2016 00:00:00
by Reuters
 
State-of-the-nation address ... President Jacob Zuma
 
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JOHANNESBURG: South Africa's rand weakened on Friday after President Jacob Zuma's state-of-the-nation address that analysts and economists said did not deal with concerns raised by rating agencies.

By 0645 GMT the rand had slipped 0.7 percent to 15.9100 per dollar, pushed lower by the president's failure to address investor worries over fiscal policy as well weak mining and manufacturing data.

Bonds also weakened, with the benchmark paper due in 2026 adding 7 basis points to 9.24 percent.

"There was only limited recognition of the current economic malaise with an overplaying of success of past policy targets," said Peter Attard Montalto, head economist for emerging markets at Nomura International.

Analysts said ratings agencies were keen to hear the president announce a clear plan detailing how South Africa would improve economic growth, predicted at only 0.9 percent in 2016 by the central bank.

On Thursday, data from the statistics agency showed mining production declined 0.3 percent in December, while manufacturing grew slightly in the same month.

"The impact of the commodity price rout has been disastrous for domestic mining industry," analysts at NKC African Economics said in a note.

"Unfortunately, new Mineral Resources Minister Mosebenzi Zwane offered little in the way of viable relief strategies when he addressed Mining Indaba earlier this week."

Stocks opened higher, with the JSE Top-40 blue-chip index adding 0.65 percent to 42,324 points in early trade.

 



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