JOHANNESBURG (Reuters) - South Africa’s rand surrendered some gains on Friday but remained near its three-year best ahead of Cyril Ramaphosa’s maiden state of the nation address after he was sworn in as the country’s president.
Stocks fell on Friday amid profit-taking after the main index hit a more than three year high in the previous session.
At 1515 GMT the rand was 0.24 percent weaker at 11.6375 per dollar, with some investors taking profits after the currency hit 11.5600 earlier on in the session, its firmest since February 2015.
Other South African assets continued to rally, with bond yields on the benchmark at their lowest since December 2015, while five-year credit default swaps (CDS) fell 3 basis points (bps) from Thursday’s close.
Analysts have referred to the effect as the “Ramaphosa rally” to refer to the buoyant market mood since was elected ANC leader in December.
On Wednesday Jacob Zuma resigned as president after of weeks of pressure, ending a nine-year tenure punctuated by scandals, stagnant economic growth and policy uncertainty.
“The final steps happened very quickly. South Africa has already got a new president. At present the FX market is clearly relieved that Jacob Zuma has gone,” said analyst at German-based Commerzbank Ulrich Leuchtmann in a note.
A former union leader, Ramaphosa has promised to fight corruption and woo foreign investors. He will deliver a closely watched speech at 1700 GMT.
Analysts said the rand could push past pivotal technical milestones in coming weeks, with the annual budget speech due next week a key fixture on investors’ radar.
“It is quite possible that the dollar will weaken to below 11 against the rand for the first time since December 2014 over the coming weeks,” said head of currency strategy at FXTM Jameel Ahmad.
On the bourse, the benchmark Top-40 index fell 0.86 percent to 52,111 points while the All-Share index lowered 0.69 percent to 59,122 points.
The banking sector, considered the barometer of both economic and political sentiment, fell 1.1 percent to lead the bourse lower on Friday after coming off lifetime highs in the previous session as investors took profits from over bought shares.
“There would be profit taking coming into the market you can see it especially on the banking sector. The banks are down between 0.5 and 1 percent,” said BP Berstein portfolio manager Francesco Sturino
Capitec weakened 1.09 percent to 820.94 rand and FirstRand dropped 2.22 percent to 73.68 rand.
Reporting by Mfuneko Toyana and Tanisha Heiberg