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South African rand firms up to two-month high level

09/10/2021 | 12:39pm EDT
A street money changer counts South African Rands in Harare

JOHANNESBURG (Reuters) -South Africa's rand posted its third consecutive week of gains on Friday, scaling back to a level seen two months ago as stronger local data and a risk-on mood globally supported the currency against the dollar.

At 1550 GMT, the rand traded at 14.1900 against the dollar, roughly 0.18% stronger than its previous close, and gaining 3.5% in the last two weeks.

The country's foreign exchange reserves increased to $58.41 billion in August, from $54.46 billion in July boosted further by maturity of foreign exchange swaps, FirstRand Bank said in a note.

This helped in strengthening the currency.

The upbeat mood was further bolstered by South Africa's second-quarter gross domestic product number which grew 1.2% quarter on quarter, versus expectations for 0.7% growth.

"While we remain comfortable with our view that the currency will weaken over the coming years, we have trimmed our end-year forecast to 15.25/$ (previously 15.5/$)," Jason Tuvey, senior emerging markets economist at Capital Economics wrote in a note.

Stocks listed on the Johannesburg Stock Exchange ended Friday marginally stronger but with a heavy loss seen during the week on the back of losses suffered by index heavyweights Naspers and mining companies.

The country's biggest company, tech investor Naspers, and its subsidiary Prosus NV, corrected sharply this week as China continued to clamp down through regulations on internet and gaming companies including Tencent Holdings, where Prosus holds up to 29% stake.

Mining companies also have been losing most of their yearly gains in prices as commodity prices show signs of a decline after a strong run till around mid of August.

The benchmark all-share index ended the day up 0.19% but was down over 3% from last Friday. The blue-chip index of top 40 companies closed up 0.27%.

The yield on the benchmark 2030 bond was little changed at 8.855% early on Friday.

(Reporting by Alexander Winning and Promit Mukherjee, Editing by Jane Merriman and Angus MacSwan)

ę Reuters 2021
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