The rand firmed against the dollar yesterday and was on track for monthly gains of more than 5 percent thanks to a softer greenback and higher commodity prices.
At 5pm rand was 0.51 percent firmer at R13.72 to the dollar, taking the monthly gain so far to 5.3 percent.
The dollar came under pressure more broadly yesterday as traders assessed the impact of a surge in US inflation before monthly jobs data later this week.
The rand hit its firmest since February 2019 last week, driven by investor bets that the US central bank would lend at low rates for longer despite signs of higher inflation in the world’s biggest economy.
“The strongly supportive global monetary policy environment is benefiting the domestic currency, as are South Africa’s interest rate differentials,” said Annabel Bishop, chief economist at Investec.
“The rand’s substantial run in strength to date is not expected to be endless, and as the US shows greater signs of recovery, so market fears about the US tapering its QE programme will grow and this would be expected to reduce market appetite for risk taking.”
Resource-rich rand has also benefited from a rise in commodity prices as top importer China’s economy improves.
Stocks also firmed, boosted by commodity prices like gold , platinum and palladium. Gold was on course for its biggest monthly jump since last July as the dollar headed for a second month of decline, while growing inflationary pressures also lifted bullion’s appeal.
Overall, the JSE all share index rose 0.61 percent to 67964.04 points, while the Top40 index gained 0.71 percent to 61 782.86 points.