Rand firms on virus vaccine news
The rand was firmer on Tuesday as positive news about various Covid-19 vaccines lifted appetite for riskier assets while investors remain optimistic about a US stimulus package.
The rand’s gain was its first in four days, while the gold price moved off its recent high, falling the most since midMarch.
Russian President Vladimir Putin said on Tuesday that his country had registered an effective coronavirus vaccine that formed immunity. Russian health minister Mikhail Murashko said trials would continue while production got under way at two plants.
Meanwhile, US President Donald Trump has signed executive orders to extend various stimulus measures, putting pressure on the US Congress to agree to a broader fiscal package.
Sentiment was also boosted on the day by comments from a Chinese official reaffirming that country’s commitment to phase one of the trade deal it signed with Washington.
“The highly volatile domestic currency has made some notable gains today after its recent correction from heavily overbought territory,” said Investec chief economist Annabel Bishop. “While the rand has gained somewhat today, it still remains at high risk of volatility, as does global financial risk sentiment.
“Concerns continue to centre on the prospect for global economic recovery, and particularly for the US economy. These worries are likely to persist this year and into the next.”
At 6.29pm, the rand had strengthened the most in two weeks, up 1.25% at R17.4783/$, 1.01% at R20.5794/€ and 0.96% at R22.8831/£. The euro gained 0.33% to $1.1777. The rand is still down almost 20% against the dollar in 2020.
The JSE closed firmer with banks leading the gains, while gold miners weakened in the wake of a far lower metal price and after running hard of late.
The JSE all share rose 0.72% to 57,168.24 points and the top 40 0.76%.
Banks added 3.35%, financials 2.49% and industrials 1.18%.
The gold index had its biggest fall since SA’s hard lockdown began on March 27, slumping 9.07%.
Gold dropped 4.03% to $1,944.28/oz and platinum 2.72% to $959.14/oz. Brent crude had gained 0.53% to $45.16 a barrel.
“Traders who were looking for an excuse to lock in profits with their bullish gold bets jumped all over Russia’s vaccine news,” said Oanda senior market analyst Edward Moya.