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South Africa's rand weakens as markets wait for Fed, stocks gain

07/28/2021 | 02:20pm EDT
A street money changer counts South African Rands in Harare

JOHANNESBURG (Reuters) - South Africa's rand dipped on Wednesday, as the dollar rose ahead of the outcome of a Federal Reserve meeting that could offer clues on the U.S. central bank's policy tapering plans.

At 1550 GMT, the rand was trading at 14.8275 against the dollar, around 0.4% weaker than its previous close.

"The markets will likely remain cautious today as we await the outcome of the (Fed meeting), and the focus is likely to be on any indications of a taper," Nedbank analysts said in a note.

The dollar has enjoyed a month-long rally after a hawkish shift from the Fed in June, and investors are waiting to see whether there are more signals this month in the face of spiking U.S. inflation.

Hints of a faster end to extraordinary policy support could lift the dollar further and pressure emerging market currencies like the rand.

On the Johannesburg bourse, stocks rose to an eight-week high after a lacklustre last few days as technology investor Naspers and its subsidiary Prosus bounced back from their two days of sharp drops.

Naspers, through Prosus, holds a 29% stake in Chinese tech giant Tencent Holdings , and had been showing massive drops on the back of Beijing's increased scrutiny and clamp-down on technology companies, especially in the education sector.

Naspers and Prosus both were up around 7% on Wednesday.

The benchmark index closed up 1.76% to end the day at 68,526 points and the blue-chip index of top 40 companies ended up 1.9% at 62,369 points.

The rally was also boosted by mining companies, especially platinum group metal miners whose strong profit numbers boosted the mining index up by 1.31%.

Bonds firmed, with the yield on the benchmark 2030 government bond down 1.5 basis points at 8.910%.

(Reporting by Promit Mukherjee, Olivia Kumwenda-Mtambo and Alexander Winning; Editing by Nick Macfie)

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.01% 0.7279 Delayed Quote.-5.58%
BRITISH POUND / US DOLLAR (GBP/USD) -0.05% 1.3693 Delayed Quote.-0.05%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.02% 0.792 Delayed Quote.0.62%
EURO / SOUTH AFRICAN RAND (EUR/ZAR) 0.08% 17.4869 Delayed Quote.-2.06%
EURO / US DOLLAR (EUR/USD) -0.08% 1.16878 Delayed Quote.-4.02%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.07% 0.013539 Delayed Quote.-1.05%
NASPERS LIMITED 0.25% 2486 End-of-day quote.-17.66%
NEDBANK GROUP LIMITED -1.96% 169.25 End-of-day quote.30.72%
NEDBANK LIMITED 1.16% 8.75 End-of-day quote.17.45%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.09% 0.70105 Delayed Quote.-2.30%
PROSUS N.V. -0.27% 70.02 Real-time Quote.-20.76%
TENCENT HOLDINGS LIMITED 0.96% 464.6 End-of-day quote.-17.62%
THE PLATINUM GROUP PUBLIC COMPANY LIMITED 0.00% 3.06 End-of-day quote.24.39%
US DOLLAR / SOUTH AFRICAN RAND (USD/ZAR) 0.10% 14.96086 Delayed Quote.2.00%
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