South Africa’s rand firmed early on Monday, helped by increased risk appetite as investors bet again on a global economic recovery.
The rand was 0.36% stronger at 16.7100 against the dollar at 0645 GMT, its best level since June 11, having gained steadily since opening above the 17.00 mark last Monday.
The gains have been driven mainly by global sentiment rather than domestic factors, with investors searching for high yields on hopes for a quick economic recovery despite a global surge in COVID-19 infections.
Emerging market currencies rose in unison, taking advantage of a dollar weighed down by the United States’ battle to contain the spread of the coronavirus as well as some investor caution ahead of data releases due in the world’s top economy.
Traders, however, expect the rand to face to some selling pressure later in the week, with power utility Eskom announcing that nationwide controlled blackouts would continue on Monday.
“The rand juggled cautious sentiment – as coronavirus infections are surging across the globe and frustration hit as South African power utility Eskom switched off the lights – against a soft U.S. PPI (producer price index) release,” said analysts at NKC African Economics in a note.
Bonds also firmed, with the yield on the benchmark 2030 government issue down 2 basis points at 9.475%.