South African rand recovers after slipping to two-month low, stocks rise
|08/05/2020 | 11:47am|
South Africa's rand recovered on Wednesday from a two-month low set the previous session, thanks to a weaker dollar, while stocks jumped to a more than five-week high led by gold miners.
At 1505 GMT the rand was 0.6% firmer at 17.2650 per dollar, after falling on Tuesday to 17.5350, its lowest since early June.
"It is shaping up to be yet another rough and rocky trading week for the battered dollar as investors attack the currency at any given opportunity," Lukman Otunuga, senior research analyst at FXTM wrote in a note.
"With the dollar falling victim to crumbling U.S. yields, uncertainty over the latest coronavirus relief package and shaky economic fundamentals, emerging market currencies like the rand have the potential to appreciate," Otunuga wrote.
On the stock market, shares were led higher by gold miners as bullion burst above historic resistance of $2,000 per ounce, with investors seeking a safe store of value. [GOL/]
Leading the climbers, Harmony Gold rose 9.61% to 124.95 rand, followed by DRDGOLD, up 7.99% to 28.38 rand, while Gold Fields climbed 7.78% after it said booming gold prices could drive up half-year profits by more than 300%.
The mining index was up 4.87%.
"Loose monetary and fiscal policies around the world have been supportive to most mined commodities," Bank of America Commodity Strategist Michael Widmer said in a note.
"Continued fiscal spending as governments are mending the damage from COVID-19, backstopped by central banks, means that interest rates will remain low, at the same time as the economy reflates."
The Johannesburg All-Share index rose 2.45% to 57,629 points, a level last hit on Feb.25, while the Top-40 index rose 2.56% to 53,279 points.
In fixed income, the yield on the benchmark government bond due in 2030 was down a single basis point to 9.325%.
(Reporting by Olivia Kumwenda-Mtambo and Nqobile Dludla; Editing by David Holmes)