The rand continued is recent strength against the dollar on Wednesday, firming for an 11th straight session earlier in the day, with the positive sentiment also reflected in the JSE which powered to a fresh record for a second straight session.
The US Federal Reserve’s decision to cut its benchmark rate by 50 basis points (bps) last week, exceeding the 25 bps cut that markets had factored in, saw the rand gain overnight — reaching its best level since February 2023.
The local currency has been further supported by a weaker dollar as markets bet on deeper rate cuts by the Fed, said TreasuryONE currency strategist Andre Cilliers.
Cilliers said the weaker dollar and lower interest rates make SA stocks more attractive to foreign investors, potentially increasing foreign investment.
A firmer rand also lowers the government’s debt servicing costs and dollar-priced imports, which bodes well for retail and consumer-focused stocks, and ultimately consumers.
In addition, the Reserve Bank’s composite leading business cycle indicator increased by 0.7% in July 2024, indicating an encouraging uptick in economic activity in July, which could boost investor sentiment further.
At 7pm the rand was trading at R17.2698/$, less than 0.1% weaker on the day, but it has appreciated almost 8% against the dollar since June. The local unit was 0.39% firmer at R19.2168/€ and had appreciated 0.46% to R23.0079/£. The euro, meanwhile, was 0.53% weaker $1.1121.
On the equity market, the JSE all share added a further 1.4% to end the day at 85,960.32 points after gaining more than 1.1% on Monday, while the top 40 added 1.49%. Local markets were closed for a public holiday on Tuesday
Gains were seen across most JSE indices, with industrials adding 2%, banks 0.26%, financials 0.3% and industrial metals and mining 6.21%. Oil, gas and coal also gained 4.52%, though SA listed property was slightly lower.
On Wall Street, the Dow Jones industrial average was 0.76% weaker at 41,885.44 points, while the S&P 500 was down 0.34%. Markets were also weaker in Europe — London’s FTSE 100 eased 0.17%, Germany’s DAX was down 0.41% and France’s CAC 40 shed 0.5%.
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