UPDATE 1-South Africa's rand strengthens on government move to open economy from May

  • Reuters
  • Forex News
UPDATE 1-South Africa's rand strengthens on government move to open economy from May
Credit: © Reuters.

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JOHANNESBURG, April 24 (Reuters) - South Africa's rand rallied on Friday as markets cheered President Cyril Ramaphosa's move to open parts of the economy next month at the end of a five-week coronavirus lockdown, although some worries lingered about the details of the plan.

At 1530 GMT the rand ZAR=D3 was 0.7% firmer at 18.9710 per dollar, having touched a session-best 18.8300 in an advance aided by an easing greenback as optimism over a European Union recovery package spurred some risk taking. announcement on Thursday night of a phased easing of lockdown restrictions set to begin on May 1 will see some industries open for business while internal travel restrictions are eased. Africa's battered economy, along with rocketing debt and a yawning fiscal deficit, has weighed heavily on the rand, making it the worst-performing emerging market currency. Growth this year is set to contract between 6% and 10%.

"There are at least two different elements for where investors can look upon South Africa in a positive light. One of them is that it actually has a plan to loosen restrictions," said head of strategy at FXTM Jameel Ahmad.

"Secondly, and this is the most important reason of them all, is because South Africa managed to react relatively early to all of this compared to peers in far more advanced places, and this has helped prevent an extended outbreak," Ahmad said.

Government bonds were weaker, weighed down by the impending rebalancing of the World Government Bond Index at month end. The yield on the 10-year instrument due in 2030 ZAR2030= climbed 10.5 basis points to 10.955%.

Stocks were slightly lower on Friday with the FTSE/JSE Top 40 index .JTOPI down 0.15% to 45,595.47 points and the JSE all share index .JALSH also down 0.15% to close at 49,527.23.

JSE's gold mining index .JGLDX , a collection of the top five gold miners in South Africa, gave support to the market with the index up 3.75% by the close. ($1 = 19.1081 rand)

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