UPDATE 1-South Africa's rand clings to gains, stock rally continues

  • Reuters
  • Forex News
UPDATE 1-South Africa's rand clings to gains, stock rally continues
Credit: © Reuters.

(Adds latest figures, analyst quotes)

JOHANNESBURG, Dec 4 (Reuters) - South Africa's rand edged firmer on Friday, capping a week of gains spurred by progress globally on a COVID-19 vaccine and investor bets on further stimulus in the United States.

At 1500 GMT the rand ZAR=D3 was 0.16% firmer at 15.1600 per dollar, bringing gains for the week to more than 2%.

The rand has defied a slew of negative economic data, including credit rating downgrades two weeks ago dragging the country's debt deeper into junk territory, and data showing the rebound in economic activity was slowing.

"SA's trade surplus is aiding the currency, while recent portfolio inflows have also managed to strengthen the USDZAR towards our long-held target closer to R15.00/USD," Nedbank analysts Reezwana Sumad and Walter de Wet said in a note.

"The hunt for yield given the ultra-low interest rates in advanced economies, along with optimism over a possible COVID-19 vaccine rollout and expectations of further stimulus measures by the Fed and ECB, has prompted the rally in EM assets in recent weeks."

A surge in infections in parts of the country has, however, slowed the rand's rally. On Thursday President Cyril Ramaphosa tightened COVID-19 rules in the Eastern Cape province where infections are rising the most, but decided against reinstating a nationwide lockdown. firmed. The yield on the 2030 ZAR2030= government issue was down 8.5 basis points to 8.950%.

On the bourse, stocks stretched gains to a fourth consecutive session.

The Johannesburg benchmark all-share index .JALSH rose 0.8% to end at 59,419 points, its highest level in more than a year. The blue chip index of Top-40 companies .JTOPI closed 0.61% higher at 54,500 points, a level last seen in 2018.

Curbing gains were gold stocks .JGLDX , which fell 0.78% as the rand strengthened. South African gold miners benefit from a weaker currency, as their revenues are often in dollars while costs are in rand.

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