UPDATE 1-South Africa's rand, stocks boosted by global risk demand

  • Reuters
  • Forex News
UPDATE 1-South Africa's rand, stocks boosted by global risk demand
Credit: © Reuters.

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JOHANNESBURG, Dec 1 (Reuters) - South Africa's rand rallied more than one percent on Tuesday, recouping most of the previous session as hopes of a coronavirus vaccine and signs of economic recovery around the world kept investors interested in risk assets.

Stocks also rose, tracking global equity indices.

At 1530 GMT the rand ZAR=D3 was 1.52% firmer at 15.2400 per dollar, having dipped to a three-session low of 15.4750 overnight in erratic trading.

The rand's gains matched advances by fellow high-yield, emerging market currencies, with the Brazilian real and the Mexican peso both posting 1% gains.

"Yesterday it appeared to be a global case of profit taking and month-end fixes with commodities struggling, equities lower and the Dollar stronger," Standard Bank (JO: SBKJ )'s Warrick Butler said in a note to clients.

Along with optimism about a vaccine, expectations of more monetary stimulus from the United States and signs of a solid rebound in China have driven risk buying, although South Africa's specific growth challenges have tempered inflows.

On Tuesday, the government asked for a court hearing over a wage dispute with public sector trade unions to be postponed to 2021. Unions took the government to court after officials said the state could not afford to pay salary increases that were due to come into force in April 2020. view the dispute as critical as the wage cuts are a centrepiece of government's plan to stabilise soaring debt levels.

The Absa (JO: ABGJ ) Purchasing Managers' Index (PMI) also showed a slower local economic recovery, with new sales dropping in November. pair may well consolidate in its recent trading range of 15.10-15.50," economists at ETM Analytics said. "A break of 15.00 still very much on the cards as more Fed stimulus and material progress in the development of a COVID-19 vaccine looks likely."

The Johannesburg All-Share index .JALSH firmed 0.73% to 57,510 points, while the Top-40 index .JTOPI closed up 0.74% to 52,764 points.

Gold shares .JGLDX gained 7%, with Gold Fields GFIJ.J up 6.68% to 140.33 and Harmony Gold HARJ.J 6.53% firmer to 67.40 rand.

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