Johannesburg - South Africa's rand and government bonds retreated against the dollar on Tuesday as euphoria over the dropping of fraud charges against Finance Minister Pravin Gordhan faded and the ailing economy took centre stage once more.
Stocks fared better, helped by higher platinum and gold prices which lifted the resources sector. The benchmark Top-40 index gained 0.97 percent to 44,444 points, while the All-Share index gained 0.82 percent to 51,002 points.
By 15h55 GMT the rand traded 0.8 percent weaker at 13.5900 to the greenback after ending the previous session at 13.4825.
The rand had rallied to a five-week high on Monday after the state prosecutor said he would not pursue fraud charges against Gordhan, easing fears that South Africa could lose a finance minister well-respected by the financial markets.
The case has raised fears among investors of political pressure against the Treasury to abandon its commitment to prudent fiscal policies. Also, the threat of credit rating downgrades by year-end hangs over Africa's most industrialised economy as growth remains sluggish.
“The offshore investment community is definitely not long rand assets. Who could blame them given the political backdrop?” Standard Bank trader Warrick Butler said in a note.
“Coupled together with the chance (probably 50/50 now in my mind) of a ratings downgrade in December one can certainly understand the hesitancy in owning South African assets regardless of the value.”
Government bonds also ended the day on a weaker footing, with yields edging up from Monday's three-week lows.
The yield for the 10-year benchmark added 4 basis points to 8.76 percent.
Stocks had a better day, with gold and platinum shares pulling their index up 6.83 percent while the overall mining index gained 3.38 percent.
Platinum producer Lonmin surged 18.03 percent to R36.20, Impala Platinum was up 9.23 percent to R59.20 and Anglo American Platinum rose 7.04 to R340.06.
“The general feeling is we have seen the bottom in resources and there seems to be more demand coming out of China which is helping,” Independent Securities trader Ryan Woods said.
Trading on the stock market was below average, with 211 million shares changing hands compared with last year's daily average of 296 million, according to preliminary bourse data.
REUTERS