Try our mobile app
By Tannur Anders, Rachel Savage
(Updates to reflect day’s trading, adds analyst quotes)
JOHANNESBURG, June 12 (Reuters) - The South African rand extended gains on Monday, building from the previous week, as investor sentiment towards Africa’s most industrialised economy improved.
At 1317 GMT, the rand traded at 18.5250 to the dollar, over 1% stronger than its closing level on Friday.
The dollar was slightly weaker - trading at 103.450 against a basket of global currencies.
Analysts say the rand’s gains come partly on the back of reduced intensity of power cuts at home and speculation that the BRICS summit of emerging countries may be moved out of Johannesburg due to the arrest warrant by International Criminal Court hanging over Russian President Vladimir Putin’s head.
“The other factor that investors have cheered in recent days is reduced tensions between (South Africa) and the West regarding Russian relations,” said Kieran Siney of ETM Analytics.
South Africa’s President Cyril Ramaphosa is expected this week to travel to Russia and Ukraine for an Africa-led peace mission in an attempt to end the ongoing war.
“We usually see these types of dilemmas as an opportunity for foreigners to buy back into (South Africa), even though it is mostly foreigners that created the initial selloff,” said Casparus Treurnicht, a Gryphon Asset Management portfolio manager.
The rand has recovered over 6% in June after plummeting around 7% in May.
South Africa’s sovereign dollar-denominated bonds also
continued their June rally
, with the 2044 maturity up the most, rising 1.560 cents at 1345 GMT to 73.424 cents in the dollar, according to Tradeweb data.
That was its highest level since early April .
“Real progress in minimising load shedding... is the main driver,” said Razia Khan, chief Africa economist at Standard Chartered refering to the power cuts.
“Adding to the tailwinds for SA Eurobonds are growing expectations that the Fed could be done with its tightening cycle,” Siney of ETM Analytics added.
Policy meetings of the U.S. Federal Reserve, the European Central Bank and the Bank of Japan will set the tone for the week, as markets seek clues from policymakers on the future path of interest rates.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index were last trading almost 0.5% stronger than its previous close.
South Africa’s benchmark 2030 government bond was stronger, with the yield down 6 basis points to 10.760%. (Reporting by Nellie Peyton, Tannur Anders and Rachel Savage Editing by Alexander Winning, Bhargav Acharya and Toby Chopra)
