JOHANNESBURG: South Africa's rand firmed against the dollar on Friday, reversing a sharp overnight dip to end the week near a 27-month high as bets of lower lending rates for longer in the United States outweighed jitters over rising inflation.
At 1545 GMT the rand was 0.05% firmer at 13.7500 per dollar, having slipped to a three-session low of 13.8800 earlier before regaining momentum in turbulent trading marked by month-end balancing and technical positioning.
A recovering dollar, with the index measuring it against a basket of major currencies, was on track for its biggest weekly advance since the end of April.
That brought the technical support level of 13.90 for the rand back into view, prompting some selling.
Technical analysts use support and resistance levels to gauge price points indicating probabilities of a pause or reversal of a prevailing trend.
The rand hit its firmest since February 2019 earlier in the week, driven by investor bets that the U.S. central bank would lend at low rates for longer despite signs of higher inflation in the world's biggest economy.
"The rand will continue to follow the fortunes of commodity prices, and thus will fluctuate as markets weigh the relatively positive news out of the U.S. against China's campaign to curtail the commodity price rise," said Siobhan Redford of RMB.
Shares on the Johannesburg Stock Exchange continued to rise.
The main indexes are now hovering near all-time best highs seen earlier in May, with a strong local earnings complimented by dissipating concerns on inflation.
Analysts have said that long bond yields in the U.S. and outlook on U.S. inflation are the only factors driving the local market.
"Our share market is not that expensive. It's clearly in over-valued territory, but probably only marginally over-valued," said Wayne McCurrie, portfolio manager at FNB.
The benchmark FTSE/JSE all-share index closed up 0.92% to 67,555 points.
The blue-chip index of top 40 companies, a real gauge of how the best companies on the JSE has performed, ended up 0.89% to 61,345 points.
Except for mining and some real estate companies, the rally in the market was across the board with industrials and financial stock among the top performers.