June 7, 2019 / 4:13 PM / 2 months ago

REFILE-UPDATE 1-South Africa's rand set for weekly losses on central bank row, stocks up

(Refiles to fix typo in headline)

JOHANNESBURG, June 7 (Reuters) - South Africa’s rand firmed in afternoon trade on Friday thanks to a weakening U.S. dollar, but the local currency was on track to end the week on a weaker footing after a row over the central bank’s mandate rattled investors, while stocks also gained.

At 1500 GMT, the rand was 0.58% firmer at 14.9075 per dollar, as the greenback fell on weak U.S. jobs data that boosted expectations the Federal Reserve would cut interest rates this year.

But the recovery was not strong enough to erase huge losses suffered in the week, after a public spat among senior ruling African National Congress officials over the Reserve Bank’s mandate added to the bad news of a contraction in the economy.

The currency had weakened to a session low of 15.1750 earlier on Friday, its weakest since September 2018, bringing losses since Monday to 5%.

“Matters could well have been even more severe for the rand if this was a week where the greenback remained strong in global markets,” said Lukman Otunuga, analyst at futures brokerage FXTM.

The central bank mandate row has exposed deep divisions within the ANC. A group loyal to President Cyril Ramaphosa opposes calls from a rival faction for the bank to do more to boost employment and kick-start growth in the country’s ailing economy.

Data on Tuesday showed first-quarter growth contracted 3.2%, the most in a decade, almost immediately followed by the ANC’s announcement that it wanted the bank to consider quantitative easing to lower government debts, sending the rand crashing.

In fixed income, the yield on the benchmark 10-year government bond was down 1.5 basis points at 8.455%.

On the bourse, stocks closed stronger with the broader All-share index up 1.77% at 58,099 points, while the Top-40 index rose 1.94% to 51,976 points.

Petrochemicals company Sasol topped the blue chips and gained 3.57% to 379.45 rand after the company announced that it had signed $1.8 billion senior credit facilities to refinance the Lake Charles project asset finance loan.

“There’s a lot of contributors to the Sasol story... They had structural problems with having to cough up some more money, and their stock has basically been oversold, so we’re seeing some of that recovery now,” said Bright Khumalo, a portfolio manager at Vestact.

Absa also climbed 3.31% to 170 rand after the company said its split from parent company Barclays was on course and within budget, while clothing retailer Mr Price gained 3.240% to 202.83 rand. (Reporting by Olivia Kumwenda-Mtambo and Onke NgcukaEditing by Gareth Jones)

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