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South African rand and stocks rally after Fed reassurance

07/29/2021 | 12:32pm EDT
South African Rand coins are seen in this illustration picture

JOHANNESBURG (Reuters) -South Africa's rand and stocks rallied on Thursday, after the U.S. Federal Reserve's reassurance that interest rate hikes remain distant.

Assets in Africa's most industrialised economy are highly susceptible to swings in sentiment on global markets.

At 1600 GMT, the rand traded at 14.5550 against the dollar, around 1.1% firmer than its previous close and mirroring gains elsewhere in emerging markets.

Fed Chairman Jerome Powell in a news conference overnight took a dovish stance, saying the U.S. job market still had "some ground to cover" before it would be time to pull back emergency economic support measures.

Riskier currencies like the rand thrive on U.S. interest rates remaining low because they benefit from the interest rate differential that increases their appeal for carry trade.

In equities, the all-share index on the Johannesburg Stock Exchange (JSE) jumped to its best-ever close, boosted by strong results from mining companies and upbeat trading in global shares.

A further recovery for technology investor Naspers and its subsidiary Prosus after a recent rout also pulled the market higher.

The all-share index closed up 1.52% at 69,565 points and the Top-40 index up 1.65% at 63,395 points.

London and Johannesburg-listed Anglo American saw a jump of around 5% as bumper commodity prices lifted first-half profits to their highest ever.

Naspers and Prosus both gained around 4%.

Government bonds also firmed, with the yield on the benchmark 2030 instrument down 5 basis points to 8.875%.

(Reporting by Alexander Winning and Promit Mukherjee; Editing by Lisa Shumaker)

ę Reuters 2021
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