South Africa's rand firmed slightly against the dollar on Thursday, as recently battered emerging markets continued to benefit from China's moves to support its economy by easing monetary policy.
Rand firmer as risk appetite returns
"Looking at the technical picture of the rand versus these same currencies, it looks like there is further room for rand strength over the next few sessions."
South African bank notes featuring an image of former South African President Nelson Mandela are displayed at an office in Johannesburg January 17, 2013. REUTERS/Siphiwe Sibeko
At 0621 GMT the rand was up 0.33 percent at 13.0895 per dollar compared with Wednesday's close, extending its recovery after tumbling to an all-time low of 14.00 at the start of the week.
"The rand has failed to set a higher high over any the trading sessions since Monday’s mess and there is potential for the currency to head back below 13.0000 again," Standard Bank trader Warrick Butler said.
The local unit had also pulled back substantially against most of South Africa's trading partner currencies, Butler noted, adding:
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The rand has recovered some of its footing after the People's Bank of China's cut interest rates on Tuesday amid concerns about slowing growth in the world's second largest economy.
Sentiment toward emerging markets was also buoyed after a Federal Reserve official said on Wednesday a September interest rate hike seemed less appropriate given the threat posed to the U.S. economy by recent market turmoil.
Yields on South African government bonds edged lower in early Thursday trade, with the benchmark issue due in 2026 shedding 4.5 basis points to 8.38 percent.
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