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South Africa’s rand tumbles on global risk aversion, blue chips lift stocks

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JOHANNESBURG


South Africa’s rand slumped as much as 2 percent against the dollar on Friday, as global concerns following North Korea’s nuclear test compounded domestic political uncertainty, sending investors fleeing to safe haven assets.

Stocks however snapped two sessions of losses, lifted by companies with sales outside South Africa which stand to benefit from the weaker currency.

The rand stumbled to 14.4500 to the dollar during Friday trade, its softest in a week, and was trading at 14.3700 by 1530 GMT, a 1.6 percent decline from Thursday’s New York close.
It tracked other emerging market currencies which fell partly on news that North Korea had conducted its fifth nuclear test.

“If there’s a serious threat to geo-political stability we are likely to see risk-off trading, and the rand being one of the most liquid in terms of emerging market currencies will be affected,” ETM market analyst Ricardo Da Camara said. Government bonds were also weaker, with the yield on the 2026 benchmark issue climbing 16 basis points to 8.755 percent.

The rand’s woes were compounded by continuing domestic concerns around an investigation into Finance Minister Pravin Gordhan over the activities of a surveillance unit set up under his watch, which police say spied on politicians. Gordhan questioned on Thursday the motive of the inquiry, saying it had no basis. Opposition parties have called it a witch-hunt and a veiled attack on the independence of the Treasury. – Reuters

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