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South African rand gains as global bond market calms

(Updates prices, adds analyst comment)

JOHANNESBURG, March 1 (Reuters) – South Africa’s rand recovered on Monday from the previous session’s four-week low against the U.S. dollar as global bond markets calmed after last week’s sell-off.

At 1520 GMT the rand traded at 14.9200 against the dollar, 1.3% firmer than its close on Friday, when it slipped to its weakest since Feb. 1.

Progress on U.S. President Joe Biden’s $1.9 trillion economic stimulus plan, now awaiting Senate approval, bolstered risk appetite. Subdued moves in U.S. treasury yields on the day also tamed risk selling.

“The rand opened stronger this week after optimism around the U.S. stimulus package prompted the repetitive and familiar shift to ‘risk-on'”, said DailyFX analyst Warren Venketas.

“Lesser restrictions on local lockdown measures and a relaxed U.S. bond market aided the positive start for the rand.”

On Sunday South African President Cyril Ramaphosa moved the country from alert level 3 to 1 and said the country had signed an agreement with Johnson & Johnson to secure 11 million COVID-19 vaccine doses.

Bonds also recovered. The yield on the benchmark 2030 government bond, which touched its weakest in four months on Friday, was down 11.5 basis points at 8.940%.

In equities markets, shares closed near record highs as restrictions lifted and the country secured more COVID-19 vaccines.

This pushed general retail and food producer stocks up by 1.4%, buoyed by the prospect of a return to more normal alcohol sales.

Stocks were also supported by positive earnings and stronger commodity prices, particularly spot gold, palladium and platinum. The mining index closed 2.2% up.

Diversified service provider Bidvest Group rose 2.9% after reporting a 6.1% rise in profit for the six months to Dec. 31.

Mobile operator MTN Group, meanwhile, rose 3.6% after its Nigeria subsidiary reported a 9.7% rise in core profit.

The Johannesburg All-Share index closed 2.1% up at 67,536 points, near a record high of 67,736 points, while the Top 40 index gained 2.2% to 62,107 points. (Reporting by Mfuneko Toyana, Olivia Kumwenda-Mtambo and Nqobile Dludla Editing by David Goodman)

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