JOHANNESBURG: The rand rallied 0.6 percent against the dollar on Friday, strengthening with other emerging market assets and shaking off concerns about unrest in the mining sector after the US Federal Reserve announced a third round of monetary easing.
The rand gained to 8.2040 against the dollar at 0704 GMT, after closing at 8.2440 in the previous session.
The currency reversed a 1 percent fall after the Fed said it would buy $40 billion of mortgage assets every month until the US jobs picture improved.
"After yesterday's Fed announcement the dollar is under pressure across the board. We've had a surge in equities and commodities, so for the day we could see further strength in the rand," a local currency trader said.
The currency's next resistance level is around 8.15, the rand's previous low from earlier this week.
"The initial market reaction has been positive. The real test is whether it helps the US economy recover from its slumber, and from a rand perspective the multi-week or month issue is whether it will keep the dollar under pressure," Rand Merchant Bank said in a note.
Rand bears have retreated from 8.45 support in the previous session all the way to 8.1870 early on Friday.
Analysts say the confirmation of more US monetary stimulus shifts some attention away from South Africa's mining woes, and the rand will be temporarily allowed to join the global markets rally.
However, if the strikes sweeping across the mining sector intensify, the rand could be hit again.
Mining bosses at troubled platinum firm Lonmin have offered striking miners a wage settlement way below that demanded.
A violent rejection of that offer could weigh on local assets again, which have been under the cloud of the mining strife for the past five weeks.
"For the day we are looking for a 8.12-8.40 range - we've got to keep an eye on the mining and strikes. You've got to be cautious and wary of local events and headlines," the trader cautioned.
Government bonds gained, with yields falling 6 basis points to 5.43 percent on the three-year note and 6.61 percent on the 2021 issue.
Treasury will sell 800 million rand spread over its 2025, 2038 and 2050 inflation-linked government bonds at 0900 GMT. Results are due after the auction closes and dealers expect interest in the longer bonds to be strong.
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