Rand nosedives on MTN/Bharti

Johannesburg - News that India's Bharti Airtel had called off its talks with MTN sent the rand tumbling on Wednesday and local stocks trimmed gains.

India's Bharti Airtel and MTN said the tie-up talks had been mutually called off.

The National Treasury said the deal would have required certain exchange control and other approvals.

The rand lost as much as 2.5% against the dollar to 7.62 after the news. At 15:47 GMT, it was trading at 7.55 to the dollar, from Tuesday's New York close of 7.43.

"It's all about the MTN/Bharti deal the rand was pretty quite before that. As long as that was not a rumour and is not denied by any official person, this rand should test 7.65," said a dealer at a local bank.

Possible foreign exchange inflows to South Africa from the MTN/Bharti deal had helped the rand to gain more than 20% firmer against the dollar so far this year.

Also weighing on the rand was data that showed the trade account swung back into a deficit of R1.98bn in August, after three straight months of surpluses.

Local stocks edged higher, with the Top-40 index rising 0.22% to 22 284.39 points, while the broader All Share index gained 0.22% to 24 910.85 points.

The Top-40 was up over 1 percent earlier but trimmed those gains after the MTN news and a lower open in the US market.

"The US are down 90 points at the moment and we followed suit... The European markets - they're all lower and I think that's what dragged on our market," said Andrew Todd a trader Imara SP Reid.

The trader added that a higher gold price limited the losses on the local bourse by boosting gold shares.

- Reuters