South African Rand hits gloomy economic data, stocks soar



Urand, bonds; add actions

JOHANNESBURG, December 7 (Reuters)The South African rand weakened on Tuesday, with data showing the economy contracted more than expected in the third quarter after civil the July unrest hit production.

At 14:30 GMT, the rand ZAR = D3 was trading at 15.9750 against the dollar, 0.28% weaker than its previous close.

The economy shrank 1.5% in the third quarter, to injure by some of the worst troubles of the post-apartheid era that affected sectors such as agriculture, manufacturing and commerce.

More than 300 people have been killed and thousands of shops damaged in riots which began as sporadic protests against the arrest of former President Jacob Zuma, but widened in a wave of general anger over poverty and inequalities.

“More recent indicators suggest that activity was struggling to rebound even before the emergence of a fourth wave (of coronavirus) driven by the Omicron variant,” said Virag Forizs, African economist at Capital Economics, in reference to October manufacturing strikes and power cuts among other factors weighing on the economy.

“One consequence is that Reserve Bank officials are likely to refrain from aggressively tightening monetary policy.”

The yield on the 2030 government bond ZAR2030 = was stable at 9.475%.

Driven by news of China’s new stimulus and fading fears over the Omicron variant, the main Johannesburg Stock Exchange indices broke previous records to post their best day since March.

The benchmark all equities .JALSHfinished 2.71% up to 72,939 points, while the blue chip index of the top 40 companies .JTOPI finished up 2.96% to 66,513 points, both closing at record highs.

China’s central bank on Monday injected its second stimulus package since July by reducing the amount of liquidity banks must hold in reserve.

Most of the world’s stock markets hit record highs on Tuesday because no substantial evidence has emerged that the Omicron variant is more severe than the dominant Delta variant. MKTS / GLOB

(Reporting by Olivia Kumwenda-Mtambo and Promit Mukherjee; Editing by Ramakrishnan M.)

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