Rand powers to a third day of consecutive gains
JOHANNESBURG - THE RAND powered to a third consecutive day of gains yesterday on renewed optimism that US President Joe Biden's administration will move with speed to support the global fight against the Covid-19 pandemic.
The domestic currency appreciated to a two-week high after rising 0.06 percent to close trade at R14.91 to the dollar by close of the JSE at 5pm.
The strengthening also came amid hopes for an interest rates reprieve after inflation eased further to 3.1 percent in December, moving closer to the lower band of the SA Reserve Bank's target range of 3 to 6 percent.
The rand broke below the psychological R15 to the dollar mark on Tuesday and nearly touched R14.90, before closing at R14.97 to the greenback.
The stock market also saw remarkable gains, with the JSE All Share Index breaking the all-time high 64 000 mark again after rising 0.79 percent to 64 108 points.
The Top40 Index rising 0.85 percent higher to 58 857 points as the markets were boosted by gains in the mining stocks.
Biden's nominee for treasury secretary Janet Yellen has urged US lawmakers to “act big” on Covid-19 relief spending, arguing that the economic benefits far outweigh the risks of a higher debt burden.
Yellen's support for major increased fiscal stimulus has seen global risk appetite grow in the markets, with the dollar weakening but equity and commodity markets experiencing a jump.
Investec's chief economist Annabel Bishop said the markets were awaiting further details on the fiscal stimulus package, with substantial risk-on sentiment after Biden's inauguration.
Bishop said that market optimism was also rising on the prospect of eventually seeing the back of the disruptive nature of a number of Trumps policies and volatile commentaries, particularly the effect on financial market sentiment.
“The rand is heavily supported by risk-on as Biden nears his presidency, but will remain highly volatile, with support to the domestic currency likely to wane at times when Biden's Presidency does not meet expectations, strengthening when it does,” Bishop said.