The rand broke a three-day winning streak on Tuesday, but remained steady below R18/$.
According to Matete Thulare, RMB’s head of forex execution, the rand’s performance, with the overall better emerging-market performance, was driven primarily by a firmer gold price.
“This followed the Chinese central bank’s resumption of gold purchases after a near six-month break. Additionally, China’s announcement of a potential shift in monetary policy as early as next year, aimed at boosting the economy, also contributed to the better performance,” said Thulare.
At 6pm, the rand had weakened 0.64% to R17.8709/$, 0.13% to R18.7725/€ and 0.51% to R22.7653/£. The euro was 0.46% weaker at $1.0505.
According to Andre Cilliers, currency strategist at TreasuryONE, the rand could remain in the R17.6900/$ to R18.1800/$ trading range in the short term.
“Positive sentiment from China’s stimulus efforts and gold purchases have buoyed the rand,” said Cilliers.
Cilliers cautioned that sustained gains for the rand depended on progress in GNU-led reforms and enhanced mining and manufacturing efficiencies, “while risks include structural inefficiencies and potential global commodity price declines”.
Locally, data from Stats SA shows SA’s manufacturing production increased 0.8% year on year in October, reversing the 0.8% drop recorded for September and breaking a two-month streak of underwhelming output.
Manufacturing generates billions of rand in export revenue, accounts for about 13% of GDP and creates direct and indirect jobs.
Stats SA said the country’s manufacturing output was bolstered mainly by the petroleum, chemical products, rubber and plastic products sector, which is the largest growth contributor for a third consecutive month, rising 4.5% and contributing 0.9 of a percentage point.
Diversified mining and metals group South32 was the second-worst performer on the JSE for the day, falling the most in more than three months, down 3.28% to R41.
The company reported earlier it had withdrawn production guidance for Mozal Aluminium as escalating civil unrest in Mozambique had affected the transport of raw materials to the operation.
The group has implemented contingency plans at the smelter as the transport of raw materials to the operation is being hit by road blockages.
The JSE all share lost 0.42% to 87,271 points, with major indices mixed, while the top 40 was down 0.44%.
At 6.30pm, the Dow Jones industrial average was 0.14% firmer at 44,463 points, while markets were mixed in Europe.
With Michelle Gumede
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