Investor sentiment boosts South Africa’s rand. Investor sentiment regarding Africa’s biggest industrialized economy rose on Monday, pushing the rand higher.
The rand traded 18.5250 to the dollar at 1317 GMT, up 1% from Friday’s close.
The dollar fell to 103.450 against a basket of world currencies.
The rand’s gains are partly due to reduced power cuts at home and speculation that the BRICS summit of emerging nations may be moved from Johannesburg due to Russian President Vladimir Putin’s International Criminal Court arrest warrant.
“The other factor that investors have cheered in recent days is reduced tensions between (South Africa) and the West regarding Russian relations,” said Kieran Siney of ETM Analytics.
South African President Cyril Ramaphosa will lead an Africa-led peace mission to Russia and Ukraine this week to end the war.
“We usually see these types of dilemmas as an opportunity for foreigners to buy back into (South Africa), even though it is mostly foreigners that created the initial selloff,” said Gryphon Asset Management portfolio manager Casparus Treurnicht.
After falling 7% in May, the rand rose almost 6% in June.
The 2044 maturity rose 1.560 cents to 73.424 cents in the dollar, according to Tradeweb data.
Its highest level since early April.
“Real progress in minimising load shedding… is the main driver,” said Razia Khan, chief Africa economist at Standard Chartered.
“Adding to the tailwinds for SA Eurobonds are growing expectations that the Fed could be done with its tightening cycle,” said Siney of ETM Analytics.
As markets await interest rate guidance from policymakers, the U.S. Federal Reserve, European Central Bank, and Bank of Japan policy meetings will set the tone for the week.
The blue-chip Top-40 index (.JTOPI) closed over 0.5% higher on the Johannesburg Stock Exchange.
South Africa’s benchmark 2030 government bond yielded 10.760%.
