South Africa's rand weakens on U.S. rate hike bets, stocks extend rally

Reuters
A street trader counts out change for a customer in Durban, September 8, 2015. REUTERS/Rogan Ward

JOHANNESBURG (Reuters) - South Africa's rand weakened on Friday against the dollar which gained as investors bet on higher U.S. interest rates this year after strong economic data. Stocks ended slightly higher, extending their winning streak to the sixth straight session but gains were capped by global security concerns following the militant attack in France. At 1520 GMT, the rand traded at 14.3400 per dollar, 0.77 percent weaker from its New York close on Thursday. "We have seen emerging markets across the board sold off today. It's mainly a function of quite strong data out of the U.S. this afternoon, the dollar has strengthened as a result," ETM Analytics market analyst Jana van Deventer said. "But despite the slight losses on the rand today, it's trading firmer on the week. It continues to benefit from portfolio inflows at present and from the rebalancing in the local economy that is under way." Improving U.S. economic data has revived expectations that the Federal Reserve may raise interest rates this year. Data on Friday showed that U.S. consumer prices gained for a fourth straight month in June, while retail sales also rose more than expected. Higher U.S. interest rate expectations subdue investors' appetite for emerging markets assets, which offer higher returns but carry more risk. Government bonds also weakened, and the yield for the benchmark instrument due in 2026 added 5.5 basis points to 8.73 percent. On the bourse, the blue-chip JSE Top-40 index was up 0.39 percent at 46,454 and the broader All-share index gained 0.48 percent to 53,088. Investors worldwide had been piling into risky assets since last week when the U.S. monthly jobs report eased concerns about the resilience of the world’s biggest economy. Among movers, Truworths rallied 3.5 percent to 88.62 rand after the apparel retailer reported a 46 percent increase in annual sales. Trading volumes were below average with 189 million shares changing hands, compared with last year's daily average of 296 million shares. (Reporting by Tiisetso Motsoeneng and Olivia Kumwenda-Mtambo; Editing by Robin Pomeroy)