Friday, 28 August 2015 03:29
JOHANNESBURG: South Africa’s rand firmed to the dollar for a third straight session on Thursday as calm returned to global financial markets after U.S. economic data and a surge in Chinese equities increased appetite for risk.
At 1549 GMT the rand was up 0.17 percent at 13.1100 per dollar compared with Wednesday’s close, extending its recovery after tumbling to an all-time low of 14.00 at the start of the week.
“Global market sentiment is dictating the rand at the moment. Equities are back up so it’s filtering positive sentiment for the rand, for now though,” said Ion de Vleeschauwer, a forex chief dealer at Bidvest Bank.
Markets around the world plunged earlier in the week as a slump in Shanghai shares fuelled worries over China’s economic health. Some calm returned after Beijing moved to ease policy late on Tuesday.
In addition, strong U.S. gross domestic data also added to the gain. The world’s largest economy grew 3.7 percent year-on-year compared to 2.3 percent reported last month, lessening fears that global growth is slowing down.
Sentiment toward emerging markets was also buoyed after New York Fed President William Dudley said on Wednesday the prospect of a September rate hike “seems less compelling” than it was only weeks ago.
“There’s still a lot of nervousness out there, equities can still turn around quite badly. I’d be very weary to say that the rand is now on a massive recovery path. It’s going to have good days and bad days and today is a good one,” said de Vleeschauwer.
The market shrugged off local producer price index data for manufactured goods which slowed to 3.3 percent year-on-year in July, below expectations. Analysts said the underlying trend is expected to remain subdued with renewed downside pressure on oil prices.
The yield for the 2026 benchmark was down 0.5 basis points at 8.330 percent.
