South African rand gains as business confidence remains stable

JOHANNESBURG (Reuters) -The South African rand strengthened on Thursday against the dollar after data suggested the country’s business confidence remained relatively stable.

At 1628 GMT, the rand traded at 19.0875 against the dollar, about 0.52% stronger than its previous close. It had risen more than 1.1% earlier in the day.

The South African Chamber of Commerce and Industry (SACCI) released its business confidence index for July and June, which came in at 107.3 and 108.8 respectively.

“The SACCI business confidence report showed a marginal drop off from the June read but still remained stable indicative of no major shift in business mindset,” said DailyFX analyst Warren Venketas in a research note.

Before rising in June, the index fell every month over January to May, hurt by record power cuts, rising interest rates and lower trade volumes among other factors.

South Africa’s economy is expected to barely grow this year because of a power crisis that means businesses and households are without power for hours every day.

Venketas warned that any increase in concern over China’s economy and the continuation of a hawkish tone from the Federal Reserve could once again weaken the rand.

The rand slipped earlier this week after China’s central bank surprisingly cut key policy rates to boost a sputtering economic recovery in South Africa’s biggest trading partner.

Shares on the Johannesburg Stock Exchange fell, with the blue-chip Top-40 index ending 0.67% lower.

South Africa’s benchmark 2030 government bond was slightly weaker, with the yield up 1 basis point to 10.430%.

(Reporting by Tannur Anders and Bhargav AcharyaEditing by Alexander Winning and Hugh Lawson)