ANGGOLD: 30,002 -17 (-0.06%)
Rand rallies as Ramaphosa set to give more support for Eskom
(Adds latest prices, Eskom details, analyst quotes)
JOHANNESBURG, June 18 (Reuters) - South Africa's rand
rallied in late trade on Tuesday after the government signalled
it will give additional support to power firm Eskom and as
emerging currencies were lifted by expectations the Federal
Reserve could signal U.S. rate cuts.
At 1400 GMT the rand was 1.76% percent firmer at 14.5475 per
dollar, after early in the day trading at around the 14.80 mark.
It jumped late in the session as demand for emerging market
assets was buoyed by the potential for policy easing by the U.S.
and European Union central banks.
The U.S. Federal Reserve concludes a two-day meeting on
Wednesday and is expected to lay the groundwork for a rate cut
later this year.
On Tuesday the European Central Bank chief Mario Draghi said
there would be more stimulus if inflation failed to pick
"Further dovish commentary from ECB Chair Draghi has pushed
the rand to the top of the EM currency board this morning as the
carry trade environment begins to lighten," said currency
analyst at Monex Europe Simon Harvey.
The rand tumbled to 15.1750 on June 7, its worst level in
2019, following a 3.2% contraction to economic growth in the
first quarter and a row between ruling African National Congress
and government officials over the central bank's
"Although investments in South Africa continue to carry
substantial idiosyncratic risk, for now the climate looks to be
much more favourable as the woes of Eskom and divisions in the
ANC party become more muted," Harvey added.
News that President Cyril Ramaphosa will announce more
measures to support cash-strapped power utility Eskom after
meeting with the company's board also aided the currency,
"The comments from Ramaphosa about additional support for
Eskom have certainly boosted the rand. You saw stops triggered
at 14.60 and a move lower in illiquid conditions against a
weakening dollar," said Oliver Alwar, a senior dealer at
In February government pledged a 23 billion rand ($1.58
billion) a year bailout for Eskom over the next three years, but
the firm has said it needs more cash to keep the lights on after
nationwide power cuts earlier in the year.
Bonds also jumped, with the yield on the benchmark 10-year
government bond falling 11 basis point to 8.27%, their
lowest level since April 2018.
On the stock market, the Johannesburg Stock Exchange's
benchmark Top-40 Index advanced 1% to 52,692 points
while the All-Share Index rose 0.9% to 58,723 points,
as retailers and banks were boosted by the firmer currency.
Shoprite, Nedbank and Discovery
led the blue-chip pack, all gaining more than 3% on the day,
while the losers were led by commodity traders with Gold Fields
plunging more than 6% and AngloGold Ashanti
(Reporting by Mfuneko Toyana; Editing by Susan Fenton)
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