By Mfuneko Toyana |Reuters|
South Africa’s rand firmed marginally on Thursday, with sentiment towards emerging markets broadly boosted by U.S. President Donald Trump’s announcement on the signing of a trade deal with China, and on higher commodity prices.
By 0645 GMT, the rand strengthened 0.08% to 14.0050 per dollar from its previous close of 14.0160, its recent rally slowing as investors re-assessed positions in the new year.
Trump said on Tuesday the Phase 1 trade deal with China would be signed on Jan. 15 at the White House, spurring demand for currencies of economies reliant on exports to the world’s two mega economies.
The Chinese central bank’s decision on Wednesday to cut the amount of cash that banks must hold as reserves, a move set to boost economic activity, also cheered emerging market sentiment.
“The rand’s appreciation has been well-correlated with improving sentiment to China, as trade negotiations with the U.S. finally seem to be turning the corner, supporting sentiment in commodity market,” economists at ETM Analytics said in a note.
Bonds traded slightly weaker, with the yield on the benchmark 2026 government paper up 1.5 basis points to 8.27%.
