JOHANNESBURG (Reuters) – South Africa’s rand gained on Friday, shaking-off negative news on the domestic economy from earlier in the week, with yield-hungry investors supporting demand for the currency.
At 1510 GMT, the rand was 1.15% firmer at 16.7300 per dollar.
Data in the week showed the economy shrank 51% in the second quarter due to coronavirus restrictions, the current account had swung into deficit, and the mining and manufacturing sectors continued to contract in July, albeit at a slower pace.
The net result was turbulent trading for the rand, but dealers said the still-high yield, or carry, offered by the currency was sustaining demand.
“The effects of local statistics and data have been short lived of recent, but this cannot be overlooked forever. Market conditions will eventually change and this could prove detrimental for the ZAR (rand),” Warren Venketas, market analyst at IG, said in a note.
“For now, the ZAR is riding a global risk seeking wave which keeps pushing through domestic hurdles.”
In fixed income, the yield on the benchmark 2030 government issue was up 2.5 basis points to 9.36%.
Stocks were firmer, with the Johannesburg all share index up 0.24% to 56,088 points, while the Top 40 index closed 0.36% firmer at 51,715 points.
“All the bad news is out,” said Independent Securities trader Ryan Woods, referring to the economic data. “And the talks that we may go into level 1 (eased lockdown restrictions) next week has also helped us somewhat.”
(Reporting by Olivia Kumwenda-Mtambo and Tumelo Modiba; Editing by Mark Potter)