JOHANNESBURG: South Africa's rand touched its strongest in a week against the dollar on Wednesday, as a recovery in global sentiment boosted riskier, high-yielding assets.
Hopes that China would take steps to support its slowing economy helped the upbeat sentiment. Recent data from the world's second-biggest economy has put pressure on resource-heavy currencies such as the rand.
China is also a major consumer of South Africa's exports, and a slow-down there would depress the already struggling domestic output sector.
The rand firmed to 10.7305 to the dollar early on Wednesday, its strongest since March 19. It was at 10.7490 by 0630 GMT.
Analysts said the currency's next test would be the 10.6900/7000 range, which it has failed to breach for the last two weeks.
Investors are also waiting Thursday's decision on local interest rates before taking big positions, although the central bank is seen keeping its benchmark rate steady at 5.5 percent.
Forward rate agreements (FRAs) were pricing in lower chances of a rate hike.
"The latest bout of rand strength has seen the market erring on the side of caution and gravitating towards a 25 basis point hike or no-move scenario," said Thando Vokwana, a bond trader at Rand Merchant Bank, adding that local interest rate swaps and FRAs had repriced lower.
Government bonds were steady at 8.47 percent on the benchmark 2026 issue and 6.87 percent on the 2015 note.
Comments
Comments are closed for this article.