JOHANNESBURG (Reuters) -The South African rand posted strong gains on Thursday before President Cyril Ramaphosa’s annual State of the Nation Address where he typically announces reforms in key policy areas.
At 1545 GMT, the rand traded at 15.0175 against the dollar, up 1.3% from its Wednesday close.
Ramaphosa’s address to parliament is due to start around 1700 GMT. In previous years he has announced steps to turn around struggling state power utility Eskom and shore up public finances, attempting to boost investor confidence in Africa’s most industrialised nation.
“(The address) will be eagerly watched to see how the government plans to deal with poverty, unemployment, COVID regulations, corruption and the struggling economy,” said Bianca Botes, director at Citadel Global.
Domestic data releases on Thursday were mixed, with December manufacturing output falling 0.1% year on year, less than expected, and December mining production falling by 1.1% when growth was expected.
Johannesburg-listed stocks fell, led by declines in rand hedge shares which derive a large percentage of their profits from foreign markets and tend to weaken when the currency strengthens.
Tech investor Prosus, Cartier owner Richemont, mining firm Glencore and British American Tobacco fell between 3.56% and 0.29%.
Megacap growth stock Naspers, a tech investor that owns a majority stake in Prosus, also fell, declining 2.59%.
The Top-40 index closed down 0.23% at 69,944 points and the broader All-share index slipped 0.14% to 76,585 points. The mining index declined by 0.47% following the weak December data.
“The surge in (mining) output during 2021 is unlikely to be repeated this year, mainly due to easing commodity prices and softer global demand, particularly from China,” Nedbank economists said in a note.
The government’s benchmark 2030 bond gained, with the yield falling 6.5 basis points to 9.17%.
(Reporting by Olivia Kumwenda-Mtambo, Nqobile Dludla and Alexander Winning; Editing by Emelia Sithole-Matarise)
