November 14, 2016/Reuters
South Africa’s rand weakened on Monday, extending losses from the previous week as currency and bond markets in the United States rallied on growing bets that Donald Trump will ramp up spending to boost growth in the world’s largest economy.
Stocks ended lower with no-frills retailer Mr Price among the biggest decliners after the discount chain posted its first profit drop in 15 years, sending its shares to a level seen more than three years ago.
By 1515 GMT the rand had slipped 0.56 percent to 14.4100 per dollar, its weakest since Oct. 12, bringing total losses to more than 9 percent since Trump’s unexpected victory in U.S presidential elections held on Nov. 8.
Currencies in many emerging markets suffered, as the greenback climbed to an 11-month peak on the bets of a Trump spending spree that would accelerate U.S. inflation and bolster the case for interest rate hikes by the Federal Reserve.
After marching through successive psychological levels at 14.00 and 14.30, the unit is poised to weaken even more if it closes above 14.50 in the session, traders said.
“The rand is hanging on by its fingernails if one looks at the technical picture,” chief currency broker at Standard Bank Warrick Butler said in a note.
“The 14.48/50 previous high is all that is stopping this currency from resuming the 5-year decline against the dollar.”
In fixed income, government bonds were also weaker, with the benchmark issue due in 2026 adding 4 basis points to 9.215 percent.
On the bourse, stocks fell alongside emerging market peers on worries of heavy public spending in the U.S.
The benchmark JSE Top-40 index was down 1.2 percent at 43,466 and the broader All-share index fell 1.12 percent to 49,731,
Mr Price reported a nearly 14 percent fall in half-year diluted headline earnings per share, sending its shares, seen as barometer of the health of retail sector, down 2.7 percent to 130 rand last seen in September 2013.
About 245 million shares changed hands, below last year’s daily average of 296 million shares.
(Reporting by Mfuneko Toyana and Tiisetsto Motsoeneng; Editing by James Macharia)
