South Africa's rand extends gains on positive GDP data

JOHANNESBURG: South Africa's rand scaled a 10-month high early on Wednesday, building on the previous session's gains, as investors cheered data showing better-than-expected economic growth in the third quarter.

At 0630 GMT, the rand traded at 14.9400 versus the dollar, 0.25pc firmer than its previous close and at its highest since Feb. 17.

The rand has gained more than 7pc against the U.S. currency since the start of November, supported by an uptick in global risk appetite that has largely outweighed investors' worries about South Africa's dire economic situation.

"The bull run in EM currencies continues as risk sentiment remains positive," said Andre Botha, senior sealer at TreasuryONE, in a note.

"From a technical standpoint, the rand could now target 14.8500 and then 14.7000, however, the potential for a correction before we strengthen further remains."

South Africa's gross domestic product expanded by 66.1pc in seasonally adjusted, annualised terms in the third quarter, compared with a revised 51.7pc contraction in the second.

The focus now shifts to November consumer price inflation (CPI) and October retail sales data due later in the day.

The CPI data is expected to show a slight fall in inflation in November to 3.2pc in annual terms, from 3.3pc in the previous month.

Those modest readings are comfortable for the central bank, which has a target range of between 3pc and 6pc.

In fixed income, the yield on the benchmark 10-year government bond was down 0.5 basis point to 8.865pc in early deals.