Stocks

South Africa's rand, stocks recover on improved risk-taking

2 minute read

South African Rand coins are seen in this illustration picture taken October 28, 2020. REUTERS/Mike Hutchings/Illustration

Register now for FREE unlimited access to Reuters.com

JOHANNESBURG, Dec 1 (Reuters) - The South African rand and stocks continued their recovery on Wednesday from last week's plunge, as risk appetite returned somewhat to markets, with investors betting that the Omicron COVID-19 variant would not derail the economic recovery.

At 1511 GMT, the rand traded at 15.7950 against the dollar, 0.61% firmer than its previous close.

The currency plunged to its weakest since October 2020 on Friday, breaching 16.00 to the dollar, as the world reacted with alarm to the news of the Omicron variant, which was first detected in southern Africa.

Register now for FREE unlimited access to Reuters.com

Calm has somewhat returned to markets, following remarks from South African health experts and some drugmakers that COVID-19 vaccines were likely to offer protection against any severe disease from the Omicron variant. read more

"We have seen some risk appetite returning to the market place today as markets digest news of the Omicron COVID variant and recent comments from Fed Chair Jerome Powell," Shaun Murison, senior market analyst at IG, said.

"News that the Federal Reserve might no longer consider inflation to be transitory, has seen a knee jerk reaction from the dollar, which after strengthening overnight has given back some of its gains today."

Government bonds were also firmer, with the yield on the 2030 instrument down 0.5 basis points at 9.765%.

In the equities market, stocks mirrored gains in world stocks as they also bounced back.

Economic data that South African manufacturing activity expanded at a faster pace in November as business activity and new sales orders grew helped fuel the bullish mood.

The Johannesburg All-Share index (.JALSH) closed 1.03% while the Top-40 index (.JTOPI) climbed 1.13%.

Among the gainers, Impala Platinum (IMPJ.J) and smaller platinum group metals producer Royal Bafokeng (RBPJ.J) gained 4.18% and 4.32% respectively after Impala bought a further 14 million shares in Royal Bafokeng.

Register now for FREE unlimited access to Reuters.com
Reporting by Olivia Kumwenda-Mtambo and Nqobile Dludla; editing by Uttaresh.V and Maju Samuel

Our Standards: The Thomson Reuters Trust Principles.

More from Reuters