SABC News - Rand hits 7-week high, stocks fall:Friday 19 February 2016

Rand hits 7-week high, stocks fall

Friday 19 February 2016 05:43

REUTERS

The currency extended gains from the previous session after higher-than-expected inflation bolstered the case for further local interest rate hikes.(SABC)

The rand firmed to a seven-week high against the dollar on Thursday supported by expectations of interest rate hikes, while Gold Fields fell sharply as the stock market ended a recent rally.

At 1536 GMT, the rand traded at 15.2800 versus the dollar, 1.2% firmer compared with Wednesday's close and trading at its strongest level since December 29.

The currency extended gains from the previous session after higher-than-expected inflation bolstered the case for further local interest rate hikes.

"We've got to be careful in getting overly optimistic because we have a huge event risk ahead, there is a budget coming up next week," Bidvest Bank's chief dealer Ion deVleeschauwer said.

"But for now the market seems happy to buy the rand just because of the interest rate differentials that could potentially be in its favour because of the high inflation numbers." South African Finance Minister Pravin Gordhan will present a three-year budget to parliament on February 24.

Government bonds weakened with the yield on the benchmark instrument due in 2026 up 1 basis point to 9.095percent. On the equities market, the blue-chip Top-40 index fell 0.29% to 44,461 points and the broader All-share index shed 0.39 % to 49 857.

"The buying pressure that pushed the JSE up so strongly in the first half of this week is waning," Inkunzi  Investments' trader Petri Redelinghuys said.

Clothing retailer Truworths shares jumped 2% to R95.70 after the company said half-year sales grew by 36percent to 8.5 billion rand. On the downside, Gold Fields fell nearly 15% to R55.99 after posting a 47% decline in full-year earnings due to falling bullion prices.

Trade was active with more than 338 million shares changing hands, above last year's daily average of 296 million shares.

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