The rand on Wednesday revisited last week’s record levels while the JSE closed firmer amid mixed global peers as investors assessed debt-ceiling talks in the US.
The local currency fell as much as 1.3% to an intraday worst of R19.3784/$ on “dollar strength fuelled by optimism that US congressional leaders can agree on a debt-ceiling deal within days”, said MyWealth Investment CEO Annatjie van Rooyen.
After US President Joe Biden and congressional leaders met on Tuesday, house speaker Kevin McCarthy said that a “better process” is now in place for further talks, saying it’s “possible to get a deal by the end of the week”, Bloomberg reports.
Investors hope congressional leaders and Biden can strike a deal on the debt ceiling and avoid a catastrophic debt default.
Treasury secretary Janet Yellen has said the government needs to raise the limit at once as the US faces the possibility of defaulting as early as June 1.
“The dollar is further underpinned by hawkish comments from Federal speakers and the safe haven status of the currency during a time of uncertainty while markets eagerly await the outcome of the US debt-ceiling negotiations,” said Van Rooyen.
She said the rand has entered a new trading range of R18.78 — R19.50.
At 5.52pm, the rand had pared losses and was trading 0.97% weaker at R19.2661/$. It had weakened 0.65% to R20.8565/€ and 1.06% to R24.0465/£. The euro was 0.26% weaker at $1.0832.
The JSE all share reversed the session’s losses, closing 0.54% firmer at 78,390 points, and the top 40 was up 0.74%. Industrial metals rose 1.49%, resources 1.02%, industrials 1.01% and precious metals 0.27%. Banks lost 1.06%, financials 1%, retailers 0.65% and food producers 0.42%.
At 6pm, the Dow Jones industrial average was 0.63% firmer at 33,220 points and the S&P 500 had added 0.56%. Markets were mixed in Europe.
Share prices of Telkom plunged by as much as 16% on the day, leading losses on the JSE, after the company warned it expects to post a big drop in profit in its next annual results after impairment charges, restructuring costs and tax charges.
The telecom group said it expects profit for the year to end-March to plunge at least 85%. At close of trade, the group’s share price was 15.62% weaker at R26.48, the lowest close since November 2020.
Gold lost 0.36% to $1,981.63/oz while platinum gained 1.81% to $1,076.10/oz. Brent crude rose 2.6% to $76.62 a barrel.
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