Evergrande fears help South African rand get stronger

September 27, 2021
| Report Focus News

The South African rand ended stronger after a volatile day of trading on Monday, helped by receding fears of widespread market contagion from indebted Chinese developer Evergrande.

At 1640 GMT, the rand traded at 14.9125 against the dollar, around 0.3% firmer than its previous close.

Evergrande owes $305 billion and has run short of cash, and concerns its problems could ripple through China’s financial system and beyond have overshadowed trade on global markets in recent weeks.

But some of those fears are ebbing after China’s central bank vowed to protect consumers exposed to the housing market on Monday and injected more cash into the banking system.

The domestic focus this week is on economic data releases including August credit numbers, producer price inflation and trade figures, all due on Thursday.

Africa’s most industrialised nation performed strongly in the first half of the year, with sectors like mining expanding strongly on the back of bumper commodities prices, but it suffered a sharp knock in July when some of the worst rioting in the post-apartheid era broke out.

Last week, the central bank said an economic bounce back was mostly done as it held its main lending rate.

Johannesburg-listed stocks were mixed on Monday.

Financial shares, considered a barometer of local economic prospects, posted losses with a banking index down 0.73%. But a resources index rose 0.86%.

The Johannesburg Stock Exchange’s All-share index closed up 0.23% at 64,197 points, while the Top-40 index ended up 0.25% at 57,784 points. (Reporting by Alexander Winning and Promit Mukherjee Editing by Mark Potter)