JOHANNESBURG: South Africa's rand strengthened against the dollar early on Friday, while bond yields continued to fall as some investors pushed back the timing of an interest rate hike in the United States.
By 0618, the rand had firmed 0.03 percent to 11.5765 per dollar, shrugging off a dent in business confidence to move within range of its firmest level in 2015.
On Thursday, a local measure of business confidence slumped to its worst in five months, driven lower by concerns over electricity shortages and a recurrence of labour tensions.
The local unit, however, managed to shrug-off negative sentiment, taking advantage of an expected correction in the high-flying greenback to put gains this week past 1 percent.
Local bonds continued to firm up, with the yield on the benchmark government paper due in 2026 shedding 1 basis point to a fresh five-week low of 7.605 percent.
While global oil prices halted their recent slide, the cheaper price of crude could slow inflation in the United States and see interest rates there raised later than the predicted mid-2015 point.
"The relief rebound (in emerging markets) has been linked to comments from Fed member Kocherlakota that the US Fed should not hike rates this year," ETM Analytics said in a morning note to clients.
The local currency does, however, face risks to its recent gains ahead of Friday's US jobs report.
The data is expected to show that non-farm payrolls increased by 240,000 in December, which would mark the 11th consecutive month of job gains above 200,000, fuelling bets of an early rate hike.
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