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JOHANNESBURG — South Africa’s rand traded firmer early yesterday as emerging assets shrugged off fears of a looming rate hike in the United States, finding relief in encouraging economic data from China.
Stocks were on track to open at least 126 points higher with the equity futures on South Africa’s blue-chip Top-40 index, considered a precursor of the actual index, rising 0.27 percent.
Bonds also gained as yields fell, with the benchmark government issue shedding 3.5 basis points to 8.555 percent.
By 0645 GMT, the rand had gained 0.28 percent to 14.2150 per dollar, edging further away from Monday’s slide to a record low of 14.3860 triggered by firmer-than-expected jobs data from the United States.
The rand has been driven by offshore factors of late, with global markets bracing themselves for higher rates by the Federal Reserve, a move expected to draw investors away from riskier albeit high-yielding bets in developing economies.
Retail, investment and manufacturing data out of China early yesterday showed growth in the world’s number two2 economy continued to slow but was stabilising.
“While global markets have not been very sensitive to Chinese news in the past month, the data cannot be ignored as we continue to look for evidence that the economic growth is bottoming out,” chief trader at Rand Merchant Bank John Cairns said.
Some traders expect commodity tied currencies like the rand to come under pressure after a sharp selloff saw neighbouring Zambia’s kwacha tumbling 5 percent on falling copper prices. — Reuters
Online Reporter