February 6, 2019 / 3:40 PM / 5 months ago

UPDATE 1-South African rand falls on firm dollar, stocks up

(Updates prices, adds analysts quote)

JOHANNESBURG, Feb 6 (Reuters) - South Africa’s rand fell on Wednesday, in line with broad weakness in emerging market currencies, as the dollar settled near a two-week high after U.S. President Donald Trump’s State of the Union speech failed to surprise currency traders.

Stocks closed higher, with miners among the biggest gainers.

At 1515 GMT, the rand was 0.93 percent weaker at 13.5075 per dollar compared with a close of 13.3825 in New York on Tuesday.

With activity in currency markets remaining subdued following holidays in Asia, the rand struggled to find takers as investors awaited South African President Cyril Ramaphosa’s state of the nation speech on Thursday and the annual budget later in the month.

“The upcoming weeks are of great importance for South Africa,” UBS analysts Tilmann Kolb and Jonas David said in a note.

“The State of the Nation Address on 7 February and the budget announcement on 20 February should offer clues as to how the government wants to address the increasing public debt load and strained finances of state-owned enterprises.”

A Reuters poll this week found the rand was likely to lose about half of the 7 percent gains made against the greenback since the start of the year over the next 12 months, pressured by fiscal constraints and weak growth.

Government bonds also weakened, with the yield on the benchmark government issue due in 2026 closing 6 basis points higher at 8.65 percent.

On the bourse, the Johannesburg Stock Exchange’s top-40 index closed at 48,318 points, an increase of 0.67 percent, while the broader all-share index climbed 0.67 percent to 54,574 points.

Harmony Gold rose 7 percent despite easing gold prices, while Royal Bafokeng Platinum and Lonmin both gained more than 3 percent.

Meanwhile, shares in paper and pulp maker Sappi fell more than 5 percent after it released a trading update showing an increase in net debt in the first quarter of the year, even though it continued to grow profit in a difficult environment. (Reporting by Olivia Kumwenda-Mtambo and Emma Rumney; Editing by Mark Potter)

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