South African Rand companies after strong trade data
Urand, bonds; add actions
JOHANNESBURG, June 30 (Reuters) – The South African rand strengthened on Wednesday after data showed the country posted a larger-than-expected trade surplus for May.
At 3:00 p.m. GMT, the rand ZAR = traded at 14.2666 against the dollar, 0.55% stronger than its previous close.
The currency mirrored the gains of most emerging market currencies, with traders eyeing US employment data later this week for clues to the economic recovery there and the Federal Reserve’s position.
South African Revenue Service data showed on Wednesday that the trade surplus widened to 54.60 billion rand ($ 3.83 billion) in May from a surplus of 51.25 billion rand in April, so that exports were increasing and imports were decreasing. The market expected a trade surplus of R46.50 billion.
South Africa’s economic recovery from the COVID-19 pandemic has been patchy and hesitant, but a bright spot has been rising commodity prices which have improved the country’s terms of trade.
“We expect the trade surplus to remain robust throughout the year, although it decreases over time. Commodity prices are expected to remain at current levels for the time being, before dropping to pre-pandemic levels in the medium term, â€said Pieter du Preez of NKC African Economics.
Stocks have continued to swing wildly between losses and gains since Monday, as investors questioned whether an impact from rising coronavirus cases would further hurt the economy or whether strong state employment data -United would give a deeper boost.
After rising more than a percentage on Tuesday, stocks cut gains by half on Wednesday, with the all-stock benchmark closing 0.45% lower at 66,249 points.
The Top 40 Index of Biggest Companies .JTOPI loses 0.55% to end the day at 60.162 points.
Stocks in banks and financials, which rely heavily on the local economy, however, remained resilient, suggesting that most of the day’s losses were largely linked to falling global stock markets.
“The banking index .JBANK was up 0.44% at the close of trading hours.
Government bonds strengthened alongside the currency, with the benchmark performance 2030 ZAR2030 = down 6.5 basis points to 8.895%.
($ 1 = Rand 14.2583)
(Report by Olivia Kumwenda-Mtambo and Promit Mukherjee, edited by Nick Zieminski)
((Olivia.Kumwenda@thomsonreuters.com; +27 10 346 1084;))
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