Johannesburg - South Africa's rand was trading close to its highest level in nearly four weeks on Monday after extending gains made late last week as the dollar struggles and sentiment towards emerging markets improves.
The rand was at 10.8580 to the dollar at 08:54 SA time, in line with its New York close on Friday, the second consecutive session that ended above the key 11 mark.
The dollar fell to six-week lows against a basket of major currencies on Monday, dragged down by data released on Friday that showed US manufacturing output unexpectedly fell in January due to bad weather.
Upbeat Chinese data lifted sentiment towards emerging markets, with data showing banks in January disbursed the highest volume of loans of any month in four years.
The surge suggests the world's second-biggest economy may not be cooling as much as feared.
“Dollar/rand has pushed as far as 10.85 and has some scope for further mild downside this morning. The primary driver remains dollar weakness but what is ultimately much more important is the slow return of investor confidence in emerging markets,” Rand Merchant Bank analyst John Cairns wrote in a note.
“With no news being good news, expect the rand to continue this stop-start rally unless we get another major EM shock.”
The yield on the 2026 government bond dropped 1 basis point to 8.655 percent as did that on the 2015 paper which was yielding 7.13 percent. - Reuters