CLICKS: 24,405 0 (0.00%)
South Africa's rand falls as investors weigh local, global risks
Aug 19 (Reuters) - South Africa's rand weakened on Monday as
traders and investors continued to weigh heightened global
growth risks against local uncertainty, while equities rose in
line with global stock markets.
At 1555 GMT the rand was 0.82% weaker at 15.4150
per dollar, tracking weakness in most emerging markets
currencies as trade worries linger.
The rand has fallen more than 7% since the beginning of
August, pressured by the rising likelihood of a credit ratings
downgrade by Moody's linked to a massive, additional bailout for
state power firm Eskom and signs of slower global growth.
The inversion of the U.S. Treasury bond yield curve - widely
viewed as a sign of looming global recession - for the first
time since 2007, also put pressure on the rand last week.
"Lingering concerns over a global recession will continue
influencing market sentiment in the week ahead, with world
equities, emerging markets and riskier currencies in the direct
firing line," Lukman Otunuga, a senior research analyst at FXTM
said in a note.
"Although treasury yields are recovering from record lows,
the movements in bond markets will be monitored closely by
Locally, traders will also look to Wednesday's release of
local consumer price inflation for July, with the rand's
attraction as a carry yield target the key focus.
"While the rand is positioned to react on the inflation
data, where the currency concludes the week will be influenced
by external forces," said Otunuga.
On the bourse, however, stocks rose to a three-month high.
The Johannesburg Stock Exchange's broader all-share index
closed 0.95% up to 54,386 points, while the benchmark
Top-40 index gained 1.01% to 48,647 points.
Leading the blue-chip index upwards was chemicals and energy
company Sasol, which rose 3.29% to 273.71 rand, while
miner Anglo American gained 3.07% to 322.85 rand.
Pharmacist Clicks also increased 2.57% to 198.07 rand.
Ryan Woods, trader at Independent Securities, said the stock
market was lifted by factors including the prospect of
government stimulus to stave off recession Germany.
China's central bank also unveiled interest rate reforms
expected to lower corporate borrowing costs, boosting hopes that
major economies would seek to prop up stalling growth with fresh
stimulus measures and lifting stock markets around the world.
Bonds weakened, with the yield on the benchmark paper due in
2026 adding 4.5 basis points to 8.43%.
(Reporting by Olivia Kumwenda-Mtambo and Onke Ngcuka, editing
by Pritha Sarkar)
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