Cape Town - South Africa’s rand advanced to its strongest level in five months after Moody’s Investors Service said the African National Congress’ win in the May 7 election is credit positive. Bonds gained.
The victory ensures continuity in macroeconomic policy, according to an e-mailed statement from Moody’s.
The ruling ANC won 62.2 percent, compared with 22.2 percent for the Democratic Alliance, the main opposition party.
Moody’s assessment “was obviously good for the rand and provided the impetus for the move,” Jim Bryson, head of foreign exchange trading at Rand Merchant Bank, said by phone from Johannesburg.
The rand also benefited from improved sentiment toward emerging markets, he said.
It was among eight of 24 currencies from developing nations that gained today, while the MSCI Emerging Markets Index of stocks climbed a second day.
The rand rallied as much as 0.6 percent to 10.2942 per dollar, the strongest level since December 18.
It traded at 10.3149 by 11:14 a.m. in Johannesburg.
Yields on government bonds due December 2026 fell three basis points, or 0.03 percentage point, to 8.13 percent, the third drop in four days.
Moody’s rates South Africa at Baa1, the third-lowest investment level, with a negative outlook. - Bloomberg News