JOHANNESBURG – South Africa’s rand inched higher on Tuesday, adding to the previous session’s gains, with political and economic uncertainty in Britain and the United States encouraging investors to search for higher yields elsewhere.
Stocks trod water as falls in gold shares and Brait SE curbed further gains.
At 1528 GMT, the rand traded 0.35 percent firmer at 12.7750 per dollar compared to close of 12.8200 overnight in New York.
“Despite a backdrop of decline and downgrades from all of the ratings agencies, the rand continues to trade resiliently, technically the current levels would suggest the potential for a move toward the 12.5000 level, although local fundamentals do not appear to support that scenario,” Nedbank analysts wrote in a note.
The rand has gained around 1.5 percent since Moody’s downgraded the country’s credit by one notch on Friday with a negative outlook, which still left it as the only major agency to rate South Africa as investment grade.
Globally, traders eyed the start of a two-day U.S. Federal Reserve meeting. With the bank widely expected to raise interest rates, investors’ focus will be on any fresh hints on the pace of hikes in the months to come, and its assessment of the economy and outlook on inflation.
In Britain, investors were still cautious after the shock outcome of last week’s election, in which voters denied any party a parliamentary majority.
Government bonds weakened, with the yield for the benchmark instrument due in 2026 adding 3.5 basis points to 8.44 percent.
On the bourse, the benchmark Top-40 index rising 0.21 percent to 45,264, while the broader All-share index ticked up 0.12 percent at 51,625.
The biggest faller on the bourse, Brait SE, reported a 43 percent fall in full-year net asset value (NAV), weighed down by unfavourable currency movements and a weak showing at New Look, its British no-frills clothing chain.
Brait shares fell 4.55 percent to 62.51 rand.
Among the gold miners, AngloGold Ashanti fell 3.75 percent to 145.80 rand, Harmony dropped 2.17 percent to 23.85 rand and Goldfield fell 1.79 percent to 46.201 rand.
(Reporting by Mfuneko Toyana and Olwethu Boso; Editing by Kevin Liffey)