WOOLIES: 4,019 -221 (-5.21%)
S.African rand gains fade as investors left on edge over Fed
(Updates prices, adds stocks)
JOHANNESBURG, Aug 22 (Reuters) - South Africa's rand was
flat on Thursday, as a boost from lower-than-expected local
inflation was overshadowed by worries that further U.S. Federal
Reserve easing might take longer than expected.
At 1547 GMT, the rand was 0.07% lower at 15.2050,
after firming compared to its overnight close in New York in
early trading, while stocks also closed lower.
Stock markets slipped worldwide on Thursday following the
release of minutes from the Fed's July meeting, which revealed a
rift between members over its 0.25% rate cut in July.
With a large number reluctant to loosen policy, markets were
seen to have gone too far in pricing in expectations of deeper
Economists are also divided over whether easing inflation
will push the South African Reserve Bank to cut rates again at
its September meeting, following a 25 basis point reduction in
Headline consumer price inflation slowed to 4.0%
year-on-year in July, according to data from Statistics South
Africa showed on Wednesday, the lowest since January and below a
consensus forecast of 4.2%.
Lower inflation against relatively high interest rates
marginally supports the rand's carry yield attraction, but gains
based on such data tend to be quickly overtaken by other factors
such as high levels of local credit risk and diminishing chances
of lower U.S. benchmark rates.
Stocks also declined. Johannesburg's All-share index
fell 0.82% to 54,188 points, while the Top-40 index
fell 0.82% to 48,435 points.
At the bottom of both was budget retailer Mr Price,
which fell 13.70% to 156.44 rand - prices last seen almost two
years ago - after sales came in worse than expected.
"The slowdown in Mr Price was really led by a weak macro
(economic) environment. In a challenging macro environment,
you've got a lack of wage growth. It's a lack of pricing power
among the retailers," said Ayan Ghosh, investments strategist at
Grocery chain SPAR was also down 5.44% to 173.43
rand alongside other retailers such as Shoprite, which
fell 3.6% to 120.65 rand, its lowest in 8 years. Food and
clothing retailer Woolworths slipped 3.27% to 51.75
The yield on the benchmark 10-year government bond
fell 0.5 basis points to 8.27%.
(Reporting by Mfuneko Toyana, Emma Rumney and Onke Ngcuga;
Editing by Kevin Liffey)
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