South African rand buoyed by bounce back in commodity prices

JOHANNESBURG: The South African rand rallied in early trade on Tuesday, helped by the bounce back in commodity prices, which has led it back below 16.00 rand/dollar.

At 0722 GMT the rand traded at 15.92 against the dollar , about 1% stronger than its previous close.

“It was a volatile day yesterday with the ZAR touching above 16.20 and trading below 16.00.

Overnight, we have also seen a bounce back in commodity prices, which has helped the ZAR back below 16.00,“ said Adam Phillips, treasury specialist at Umkhulu Treasury. Gold and silver rose on Tuesday, rebounding from their steepest two-day drop in decades after Kevin Warsh was nominated

 as the next US Federal Reserve chair, putting the brakes on the metals’ record rally.

Despite the historic pullback in gold and silver prices, analysts see the metals’ bull run continuing and expect it to notch up more record highs later this year.

“Precious metals are all trading firmer this morning, pulling commodity currencies like the rand and Aussie dollar stronger, and seeing the dollar give back some of the last 2 days’ gains,” said Andre Cilliers, Currency Strategist at TreasuryONE in a research note.

The dollar was down 0.2% against a basket of currencies.

On the Johannesburg Stock Exchange, the Top-40 index was last up 1.03% in early trade.

South Africa’s benchmark 2035 government bond was firm in early deals, as the yield fell 7 basis points to 7.995%.