Country's rand, stocks firmer as easing Brexit risk buoys EM

South Africa's rand strengthened as much as 2.5 percent against the dollar on Monday, buoyed along with other emerging market currencies by lessening fears of Britain voting to leave the European Union.

Stocks were also up on the day, with the benchmark Top-40 index gaining 1.6 percent, while the all-share index added 1.4 percent.

The rand rallied to a session high of 14.8155/dollar, its strongest in more than a week according to Thomson Reuters data, and was trading 2.4 percent firmer at 14.8300 by 1311 GMT, compared with Friday's close of 15.1950.

The rand's gains reflected stronger global stocks and a retreat in "safe haven" assets like gold and the yen after polls showed support for Britain staying in the EU regaining momentum before a referendum on Thursday.

"Brexit has really been playing a massive role in the strength in the market. Last week we saw a lot of risk aversion because the "leave" camp was leading the polls, but that sort of changed around over the weekend," Capilis Asset Managers head of forex Giacomo Bonavera said.

A vote for Britain to leave the EU would knock risk appetite and weaken the rand, while a vote to remain would likely lead to further gains in the short-term.

"But in the longer-term outlook I feel like there are still some other worries around the market such as the global growth concerns," Bonavera added.

The rand has gained more than 4 percent against the dollar so far this year, recouping some of the heavy losses triggered in December when President Jacob Zuma changed finance ministers twice in less than a week.

The currency however remains vulnerable to the likelihood that U.S. rates will rise this year, whittling appetite for riskier emerging market assets, while ratings agencies have singled out sluggish growth in Africa's most industrialised economy as a threat to its investment grade credit rating.

Government bonds tracked the currency higher on Monday, and the yield on the 2026 benchmark fell 8.5 basis points to 8.98 percent, its lowest in seven weeks.

Shares rose in tandem with global stocks, traders said.

"We are tracking global markets. Looks like the whole Brexit thing is not gonna happen. Looks like guys might vote to stay in the UK which is good for global markets," BP Bernstein trader Vasili Tirasis said.