SA rand gains on rate hike

The South African rand strengthened on Friday after the South African Reserve Bank (SARB) increased the benchmark rate by 50 basis points.

The rand traded below the psychological level of 16.00 to the dollar.

The reserve bank increased the rate by 50 basis points on Thursday in order to stem inflation after the rand fell by nearly 14 percent since December.

On the equities front, stocks closed slightly higher with banks being the biggest gainers. The banking index rose 5 percent. The biggest gainer was Capitec bank which surged 6 percent to 481 rand.

According to analysts, the reserve bank’s decision to increase interest rates by 0.5 percent invited buyers into the sector.

South Africa’s banking sector has struggled to recover from last month’s massive losses which were as a result of President Jacob Zuma’s decision to change finance ministers twice in one week.

Meanwhile, the Johannesburg Stock Exhange JSE top 40 index gained 0.73 percent to 44,065 and the All-share index 0.9 percent to stand at 49,141.

Over all, trading on the JSE was upbeat with 339 million shares traded which surpassed last year’s daily average of 296 million shares.