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Rand rallies on EM breather previous to Fed, stocks fall

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The rand powered for the firmest since late August on Wednesday as risk assets rallied despite expectations the federal government Reserve would raise mortgage rates and draw a line with a decade of accommodative monetary policy.

The bourse was led lower by bullion stocks as gold prices took a winner from dollar gains against other currencies.

At 15:00 GMT the rand was 0.92% firmer at 14.21 per dollar, its strongest level since August 29.

The rand has shaken away from the lukewarm reception to President Cyril Ramaphosa’s multi-billion-dollar stimulus plan announced on Friday, rallying with other emerging currencies as global risk aversion subsided.

The small height and width of the stimulus programme means it can be unlikely to get a great deal of an impression, Moody’s told Reuters within a interview daily after Fitch raised similar opinion.

“Investors started in search of value in emerging markets, because amount of risk premium looks like it’s well embedded in EM assets following the turmoil experienced thus far in 2010 in the EM complex,” said Nedbank analysts Mehul Daya and Walter de Wet from a note.

A climb to two-month highs for Chinese shares and talk of IMF deal for Argentina also helped steady sentiment towards emerging currencies.

In fixed income, the yield about the benchmark government bond due in 2026 fell 5 basis points to 9.065%.

In equities, the broad all-share index was down 0.55% at 56,570.15 points while the top 40 index was 0.59% softer at 50,361.86 points.

The gold index fell 3.25% with AngloGold Ashanti falling the most on the blue chip index, down 2.95% to 124.35 rand.

Gold prices slipped for the reason that greenback strengthened prior to the response to the Fed meeting.

Shares in Capitec Bank closed 1.87% firmer right after the lender reported a 20% improvement in half-year profit, helped by strong client growth.

“An exceptionally decent number of results. The only concern was they’ve already certainly not grown while in the lending side of things however the transaction side of business is doing exceptionally well,” said Ryan Woods, an equities trader at Independent Securities.?

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