South Africa's rand firmed on Wednesday, hitting a six-week high against the dollar and a four-year high against the struggling euro, while stocks inched lower on concerns recent gains may be overdone.
The rand briefly tested key resistance against the dollar and traders are looking for further strength in the rand as markets remain bearish on the dollar and the euro.
By 1530 GMT the rand was trading at 6.7970 to the dollar, 0.45 percent firmer that its previous close of 6.8275 on Tuesday.
Against the euro, it traded at a 4-year high of 8.8179, levels last seen in August 2006.
Given thin trade ahead of the year-end holidays, traders said the currency struggled to find clear direction.
"It's a typical Christmas market," said Ian Martin, a trader at Rand Merchant Bank.
Having pierced the 6.80 resistance against the dollar to trade at a session high of 6.78.
RMB's Martin said the next target would be between 6.75 and 6.72.
Stocks edged away from a 2-1/2-year high hit earlier in the session as investors sold resource firms such as Impala Platinum and retailer Steinhoff on concerns that recent gains may be overdone.
The blue-chip Top-40 index fell 0.11 percent to 28,609.91 after earlier hitting its highest level since July 2008. The broader All-Share index fell 0.02 percent to 32,058.97.
The Top-40 is up almost 15 percent so far this year, with almost half of that logged this month alone.
Impala Platinum, the world's second-largest producer of the precious metal, fell 1.9 percent to 231.15 rand.
Shares of the company had risen 16.3 percent month-to-date as of Tuesday's close, making it the best performer for the period on the Top-40.
Retailer Steinhoff fell 1.2 percent to 24.60 rand. Its shares had risen 15.7 percent in December as of Tuesday's close.
Technical indicators show the upside may be limited in the near term for Johannesburg stocks.
The Top-40's 14-day relative strength index, or RSI, is near 60. Traders who use the RSI, a measure of momentum, consider a stock or index to be overbought at the 70 mark.
Technically, the Top-40 is also near the top of its upper Bollinger band, another sign it may be due for a pull-back.
Shares of Bidvest may move on Thursday. The company said after the close of trade it had acquired UK-based Seafood Holdings Ltd for 45 million pounds, including debt.
Government bonds continued on a firming path, with yields lower. Bonds have been well supported by significant increases in foreign inflows, which are up over 66 billion rand so far this year.
The 2015 bond closed the session at 7.40 percent while the 2026 note ended at 8.38 percent.
Source: Reuters