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South
Africa’s rand hit another 35-month high against the dollar on Friday,
continuing a recent rally that has been fed by rising risk appetite,
while local stocks edged lower in holiday-shortened trade.

The rand ZAR=D3
traded at a session high of 6.7350 to the dollar, hitting a new record
high for the year, just shy of the January 2008 high of 6.7175.

At 10:30 GMT the rand traded at 6.7530 to the dollar, not far off its close of 6.7590 on Thursday.

Foreign inflows
searching for higher yield have helped to support the rand, which has
appreciated 28 percent against the dollar so far this year.

“The stronger rand trend is continuing,” said Ian Martin, a trader at Rand Merchant Bank.

“It’s going to
drift stronger till the end of the year, I think the foreign funds
pretty much will keep it stronger.” The rand’s short, medium and
long-term moving averages point to further gains in the currency. It
also broke through key levels of resistance at 6.80 and the October
high of 6.7624 in the session, opening up the chance of a retest of
6.71.

One the bourse, investors sold some recent gainers such as Shoprite on concerns advances may be overdone.

The blue-chip
Top-40 index finished down 0.32 percent at 28,582.68. Trade on
Johannesburg Stock Exchange was a half day, ending at 10:30 GMT, ahead
of the Christmas holiday.

The broader All-share index

The Top-40 index is
up 15 percent so far this year “There is still an underlying positive
view in our market,” said Abri du Plessis, chief investment officer at
Gryphon Asset Management.

Traders have said
they expect further international demand for South African equities in
the coming year, given the better prospects for growth in developing
markets.

Shares of Shoprite
fell 1 percent to 99 rand. The retailer is the fourth-best performer on
the Top-40 so far this year, having risen more than 52 percent.

The Top-40’s best
performer this year, retailer Truworths, fell 1 percent to 70.22.
Truworths has gained nearly 64 percent this year.

Other notable
movers included Vodacom, South Africa’s largest mobile operator, which
fell nearly 2 percent to 72.75 rand. Shares of the company are up more
than 12 percent so far this month.

Government bonds
yields were steady, closing at 7.40 percent on the benchmark 2015 note
ZAR157= and at 8.38 percent on the 2026 ZAR186= issue.

(Reporting by Xola Potelwa, David Dolan and Gugulakhe Lourie; Editing by Toby Chopra)