Rand recovers some of its losses

The rand recovered some of Thursday’s heavy losses on Friday but was off its intraday best of R17.25/$. At 6.02pm, it had strengthened 0.28% to R17.5344/$. Banks gained 1.38% after plunging about 8% in the previous session as the rand came under pressure.

The rand recovered some of Thursday’s heavy losses on Friday but was off its intraday best level, while the JSE closed weaker amid mixed global markets as investors digested the hotter-than-expected US jobs report.

The local currency dropped as much as 4% to the dollar on Thursday before ending the day 2% weaker. The fall came as the fate of Cyril Ramaphosa’s presidency hung in the balance. On Friday, after gaining as much as 1.6% earlier in the session, the rand gave back some of those gains.

The weaker rand on Thursday came as the country awaited Ramaphosa’s fate after the release of a damning report by a panel led by former chief justice Sandile Ngcobo on the Phala Phala farm scandal.

“The uncertainty and fluidity of the situation are playing a significant role in keeping markets on edge. While investors await answers, the rand is likely to remain under pressure,” said RMB analysts. “Anything is possible, and the result will determine how the local unit performs in the short term amid elevated political noise.”

The rand gave back even more of its gains late on Friday after data from the US showed nonfarm payrolls increased 263,000 in November, bigger than the market expectation of a 200,000 gain. The unemployment rate held steady at 3.7%.

At 6.02pm, the rand had strengthened 0.28% to R17.5344/$ after touching an intraday best of R17.25/$. It strengthened 0.8% to R18.3725/€ and 0.49% to R21.4326/£. The euro was 0.44% weaker at $1.0476.

“Investors were hoping for a [US nonfarm] number that was both low enough to signal the labour market was cooling in response to interest rate hikes, while being strong enough to indicate the US could avoid a recession,” said SPI Asset Management managing partner Stephen Innes.

“The number — which comes after signs showing US inflation may have peaked — will likely do little to slow a Federal Reserve that has been raising interest rates steadily this year to bring down inflation still running near its highest level in more than 40 years,” added Innes.

The JSE all share index lost 0.93% to 74,323 points and the top 40 gave up 0.92%. Banks gained 1.38% after having plunged about 8% in the previous session as the rand came under pressure, while financials added 0.66%. The precious metals and mining index was down 3.16%, resources fell 2.59% and the industrial metals and mining index retreated 2.51%.