The South African rand firmed strongly at 11.60 against the U.S. dollar on Friday evening, following a largely welcomed State of the Nation address (Sona) by President Cyril Ramaphosa, at one point even touching 11.58 but later retracing to 11.63.
Market optimism towards South Africa has risen further, with net foreign portfolio flows into SA’s equity market since Ramphosa’s election to president of the ruling African National Congress in December, and has shown further inward investment on his investiture on Thursday as President of South Africa.
The ailing economy started showing signs of recovery on Wednesday when former president Jacob Zuma stepped down, with the rand breaking the 11.79, highs against the dollar last seen in 2015.
Ramaphosa's maiden Sona on Friday touched on many reforms his administration will undertake, including downsizing government departments, eradicating malfeasance in state-owned enterprises, dealing with regulatory and policy uncertainty, and resolving the impasse between government and the mining industry.
Ramaphosa said the country had seen a moderate recovery in the economy and a broader, sustained recovery in the global economy.
"Commodity prices have improved, the stock market has risen, the rand has strengthened and there are early indications that investor confidence is on the rise.
"Business confidence among South African companies has improved and foreign investors are looking anew at opportunities in our country," Ramaphosa said.
"This year, we will be initiating measures to set the country on a new path of growth, employment and transformation.
"We have to build further on the collaboration with business and labour to restore confidence and prevent an investment downgrade.
"Tough decisions have to be made to close our fiscal gap, stabilise our debt and restore our state-owned enterprises to health."
Ramaphosa said the task for the country was now to seize this moment of hope and renewal, and to work together to ensure that it makes a meaningful difference in the lives of people.
Investors and rating agencies will now focus their attention on Finance Minister Malusi Gigaba's Budget speech next week to make a determination of the country's new economic trajectory.