Johannesburg - South Africa's rand recovered its footing against the dollar on Friday, shaking off the previous day's late bout of risk aversion triggered by the downing of a Malaysian plane in Ukraine.
Investors were still applauding the South African Reserve Bank's 25 basis point hiking of interest rates on Thursday to stem inflation pressures, a move seen boosting the rand's yield appeal.
The local unit was up 0.93 percent 10.6595 to the greenback by 17:21 SA time, the strongest performance in a basket of 25 emerging market currencies tracked by Thomson Reuters.
“The core markets regained some composure after the Malaysian jet disaster, allowing for pullback in dollar/rand,” said Anisha Arora, emerging market analyst at 4Cast.
“The rate hike on Thursday did help to stem dollar/rand rallies.”
The South African Reserve Bank raised the benchmark repo rate to 5.75 percent on Thursday, saying that while it was concerned about weak economic growth, its primary mandate was to rein in inflation which has breached a 3-6 percent target band.
The move also boosted government bonds, with yields inversely retreating 6 basis points to 8.07 percent for the 2026 benchmark and 5 basis points to 6.595 percent for paper due in 2015. - Reuters