Johannesburg - South Africa's rand traded close to the previous day's three week highs on Thursday as emerging market sentiment remained buoyant following a resolution to the US fiscal impasse.
The rand was at 9.8650 by 08:33 SA time, just 0.1 percent off Wednesday's close in New York.
Against the euro, it edged up 0.18 percent to 13.3169.
The currency had climbed to 9.8555/dollar overnight, its strongest since September 25, after US lawmakers approved a last minute deal to end a fiscal standoff and avoid a default on government debt.
Sustained rand gains are not on the cards though, as the currency remains vulnerable to weak economic fundamentals including a wide current account balance and the ever-present threat of strikes, particularly in the mining sector.
These factors have helped weaken the rand more than 16 percent against the dollar since the start of the year, one of the steepest declines among global currencies.
“The rand may enjoy some extended short covering in the near term, but such strength is unlikely to be sustained over the medium term and thus importers should once again take advantage of current levels to cover forward,” Absa Capital said in a note.
“We still think that over the medium term fundamentals remain in favour of rand bears.”
On the debt market, government bonds also opened stronger from overnight levels, and subsequently yields fell across the curve, with the 2026 secondary market benchmark down 8.5 basis points to a four-week low of 7.8 percent.
The shorter-dated 2015 bond was yielding 8 basis points lower at 5.775 percent. - Reuters