South Africa's Rand Scales 8-week Highs, Stocks Rise

Mon Feb 22, 2016 4:20pm GMT

JOHANNESBURG Feb 22 (Reuters) - South Africa's rand firmed to an eight-week high against the dollar on Monday as investors returned to high yielding assets boosted by improved oil and commodity prices.

Stronger commodity prices buoyed the stock market.

At 15.20 GMT, the rand traded at 15.2175 versus the dollar, compared to its Friday's close of 15.3850.

The currency hit its strongest levels this year at 15.1930 earlier in the session, tracking emerging markets higher on hopes of further stimulus and recovery in commodity prices.

Following President Jacob Zuma's announcement of cost-cutting measures during his state of the nation address, the market has priced in a convincing budget speech on Feb. 24, by Finance Minister Pravin Gordhan.

"Expectations are now high for the Budget, as the rand has strengthened in anticipation," said Investec chief economist Annabel Bishop.

In fixed income, government bonds weakened, with the yield for the benchmark instrument due in 2026 adding 2 basis point to 9.195 percent.

The Top40 index rose 0.51 percent to 43,694 points while the broader All-Share index inched up by 0.35 percent to 49,112 points.

Kumba Iron Ore jumped 7.33 percent to 65 rand as the price of the steel-making ingredient added 7 percent, extending last week's rally on signs of a pick-up in demand in the over supplied market.

Cashbuild shares jumped 6.88 percent to 295 rand as it said it expected earnings to rise as much as 39 percent.

Hulamin said full-year earnings fell 67 percent while sales volumes slipped 7 percent, sending its shares down 6.25 percent to 6 rand.

Trade volumes was brisk on Monday with about 237 million shares changing hand, according to preliminary bourse data. (Reporting by Nqobile Dludla and Zandi Shabalala; Editing by James Macharia)