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The rand rose to its strongest since July 2015 yesterday as it crossed crucial technical points and ignited offshore buying interest.

At 5pm, the rand was up 0.28% to R12.2670 against the dollar.

Earlier in the session, the rand reached R12.1950 to the greenback, a new two-and-a-half year best, driven by what traders said was a conducive global environment and low liquidity that pushed the currency past the long-time target of R12.23.

“Once the rand went through the key support level at (R)12.23, it is likely that a lot of stop-losses were triggered,” said senior trader at Standard Bank, Oliver Alwar, adding that low levels of liquidity may have also extended the move.

When trading began, investors were wary of a return of dollar strength after losses for most of the month, as markets price in the risk of policy tightening in other developed nations. In particular, speculation is growing the European Central Bank will start to slow its asset buying this year.

Even so, the rand has remained a key carry-trade target, more so with the local central bank not expected to cut lending rates at its policy meeting on Thursday.

“Investor sentiment towards (Deputy President Cyril) Ramaphosa combined with last night’s story about the Asset Forfeiture Unit has added to global optimism. And our yields also provide very good carry for international investors,” currency dealer at TreasuryOne, Phillip Pearce, said.

Bonds were firmer, with the yield on the benchmark debt due in 2026 down 3.5 basis points to 8.475%.

Meanwhile, stocks climbed to eight-week highs, as robust retail sales and solid earnings forecasts drove investor optimism about economic growth.

The all share index was also buoyed by insurer MMI Holdings, the bourse’s second biggest gainer, after it announced that its chief executive would step down next month, as part of a management shake-up announced on Tuesday.

MMI’s share price rose 7.43% to R21.70.

The all share index rose 0.68% to 60649.6 points, while the Top40 index climbed 0.65% to 53777.68 points.

The Foschini Group closed 5.17% higher at R181.

-REUTERS