Johannesburg - South Africa’s rand strengthened beyond 15 against the dollar for the first time since December 21 and was set for its first quarterly gain in four years after Federal Reserve Chair Janet Yellen signaled a gradual approach to US rate increases.
The rand was the biggest gainer against the dollar after Malaysia’s ringgit among 31 major and emerging market currencies tracked by Bloomberg. The currency advanced as much as 1.7 percent and was 1.4 percent stronger at 14.9598 at 9:58 a.m. in Johannesburg.
Government rand-denominated bonds followed suit, with yields on the benchmark issue due December 2026 dropping 19 basis points to 9.16 percent, the lowest on a closing basis since March 7.
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“Yellen was outright dovish in her comments yesterday,” John Cairns, a currency strategist at Rand Merchant Bank, said in a note to clients. “The dollar has given back all the gains it ground out last week. Dollar-rand has more than matched this.”
The rally in the South African currency took the increase in the quarter to 3.4 percent, the first three-month gain since March 2012. The dollar headed for its worst month in more than five years after Yellen doused speculation the US central bank would pick up the pace of interest-rate increases in a speech to the Economic Club of New York on Tuesday.
BLOOMBERG