Rand regains ground after slipping on slowing CPI

Johannesburg - The rand regained ground on Wednesday after tumbling more than 2% to within a whisker of the 16.00 mark given the declining chance of a rate hike locally and jitters over the Federal Reserve's next move.

Stocks closed slightly higher with rand hedge companies benefiting from the weaker currency.

At 1645 GMT the rand was 1.15% weaker at 15.7400 per dollar, improved from a session low of 15.9050 as pressure on emerging markets eased with bets of fewer hikes by the US central bank regaining some traction.

Government bonds were also weaker. The yield for the 2026 benchmark added 9.5 basis points to 9.47%.

The rand sank to its weakest in more than two months after April consumer prices dipped, dampening the chances of a rate hike on Thursday.

Economists said the softer inflation print, which saw prices slow to 6.2% year on year in April from 6.3% previously, bolstered the case for South Africa's Reserve Bank to keep lending rates on hold.

"We expect the South African Reserve Bank to abstain from hiking interest rates at this week’s meeting, partly given that so-called core inflation remains below 6% year on year," said Hanns Spangenberg, analyst at NKC African Economics.

On the bourse, the All-Share index closed 0.51% to 52 797 points, with the benchmark Top-40 index up 0.52% to 46 636.

A strengthening dollar hoisted up local rand-hedged stocks, or those with operations abroad. "Rand hedges" are companies that reap the bulk of their revenue outside of South Africa, making them less sensitive to weakness in the currency.

Britain-based property company Capital & Counties rose 3.64% to R77.38, beer maker SABMiller gained 2.56% to R968.09, while Luxury goods maker Richemont picked up 1.39% to R98.35.

"A lot of the focus is still on rand hedge quality shares... With this weaker rand, those are the shares that are doing quite well," Afrifocus Securities portfolio manager Ferdi Heyneke said.

Among the losers, Spar Group, a wholesaler and distributor to independently owned stores of the same name, fell 1.13% to R208.86 after the company reported a slower rise in half-year profit.

Trade volumes were slightly down, with about 238 million shares changing hands compared with last year's daily average of 280 million.