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S.African rand falls on dour economic data, stocks soar

12/07/2021 | 11:06am EST
A South African Rand is seen in this illustration picture

JOHANNESBURG (Reuters) -The South African rand weakened on Tuesday, as data showed the economy contracted more than expected in the third quarter after civil unrest in July hit output.

At 1430 GMT, the rand traded at 15.9750 against the dollar, 0.28% weaker than its previous close.

The economy shrank 1.5% in the third quarter, hurt by some of the worst unrest of the post-apartheid era that affected sectors like agriculture, manufacturing and trade.

More than 300 people were killed and thousands of stores were damaged in the riots that started as sporadic protests over the arrest of former president, Jacob Zuma, but broadened into a general outpouring of anger at poverty and inequality.

"More recent indicators suggest that activity was struggling to rebound even before the emergence of a fourth (coronavirus) wave driven by the Omicron variant," said Virag Forizs, Africa economist at Capital Economics, referring to manufacturing sector strikes in October and power cuts among other factors weighing on the economy.

"One consequence is that Reserve Bank officials are likely to refrain from tightening monetary policy aggressively."

The yield on the government's 2030 bond was flat at 9.475%.

Buoyed by news of China's fresh stimulus and receding fears over the Omicron variant, the main indexes on the Johannesburg Stock Exchange zoomed past previous records to post their best day since March.

The benchmark all-share index finished 2.71% up at 72,939 points, while the blue-chip index of top 40 companies ended 2.96% higher at 66,513 points, with both closing at record highs.

China's central bank on Monday injected its second shot of stimulus since July by cutting the amount of cash that banks must hold in reserve.

Most global stock markets scaled record peaks on Tuesday as no substantial evidence has emerged that the Omicron variant is more severe than the dominant Delta variant. [MKTS/GLOB]

(Reporting by Olivia Kumwenda-Mtambo and Promit Mukherjee; Editing by Ramakrishnan M.)

ę Reuters 2021
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