RAND HITS 15-MONTH HIGHS

THE RAND rallied to its best level in about 15 months yesterday, extending gains from the previous session supported by strong risk appetite and positive local retail sales data.

At 5.05pm, the rand was 1.56 percent firmer at R14.17 against the dollar, trading at its highest level since early January 2020.

The dollar has been on the back foot this month as Treasury yields stabilise below one-year highs reached last month. Yields have fallen as the US Federal Reserve reiterates its commitment to holding rates near zero for years to come, and on some concerns that a recent uptick in inflation will be temporary. read more

“For the greenback to resume this year’s uptrend, it requires strong positive surprises on the economic front that convince investors again of increasing inflationary pressures,” said FXTM chief market strategist, Hussein Sayed.

Lower US interest rate expectations boost investors’ appetite for emerging markets assets such as the rand, which offer higher returns but carry more risk.

Locally, retail sales rose for the first time in 11 months in February, defying forecasts of another downturn. That helped set the stage for the rand’s rally.

Bonds also firmed, with the yield on the benchmark 2030 government issue down 10.5 basis points to 9.105 percent.

Stocks on the JSE were largely unchanged as strong earnings from the US market were offset by South Africa pausing the use of Johnson & Johnson’s Covid-19 vaccines to investigate a potential link to rare blood clots.

The JSE broader all share index closed 0.02 percent higher at 67 823.09 points. The blue-chip Top40 index fell 0.01 percent to end at 72 080.02 points.

However, the bank index, which largely depends on local economic growth prospects, shot up well beyond 2 percent but was offset by the mining index and industrial which were down.