UPDATE 1-South Africa's rand inches firmer, stocks rise

  • Reuters
  • Forex News
UPDATE 1-South Africa's rand inches firmer, stocks rise
Credit: © Reuters.

(Adds latest figures, analyst comments)

JOHANNESBURG, Dec 9 (Reuters) - South Africa's rand clung to its recent gains on Wednesday, inching firmer as global risk demand and better-than-expected local economic data lifted demand for the unit.

At 1600 GMT, the rand ZAR=D3 traded at 14.9650 versus the dollar, 0.08% firmer, near the 10-month high it hit on Tuesday following better-than-forecast third quarter economic growth data.

South Africa's gross domestic product expanded by 66.1% in seasonally adjusted, annualised terms in the third quarter, compared with a revised 51.7% contraction in the second. rand has gained more than 7% against the U.S. currency since the start of November, supported by an uptick in global risk appetite that has largely outweighed investors' worries about South Africa's dire economic situation.

"Such high levels of market optimism are driving very strong risk-on investor behaviour, causing EM currencies to strengthen on rising risk taking, with the rand reaching R14.88/USD today as foreigners continue to show interest in SA portfolio assets," said Annabel Bishop of Investec.

However, October retail sales data published on Wednesday showed a decline, down 1.8% year on year, tempering some of the enthusiasm for the currency. were a touch weaker, with the yield on the benchmark 10-year government bond ZAR2030= up 0.5 basis point to 8.935%.

On the bourse, stocks strengthened along with other emerging markets amid a global rally on U.S. stimulus hopes and positive COVID-19 vaccine updates.

The Johannesburg benchmark all-share index .JALSH rose 0.22% to end at 59,292 points, just off its year high reached earlier this week. The Top-40 index .JTOPI closed 0.16% higher at 54,350 points.

"News on vaccines is encouraging the market. As a result you are seeing strength pretty much across the board," said Ryan Woods, a trader at Independent Securities.

Curbing further gains gold stocks .JGLDX weakened 4.79% after the rand strengthened and the gold price fell.

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