News South Africa's rand creeps higher as dollar rally stalls

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South Africa’s rand creeps higher as dollar rally stalls

News South Africa's rand creeps higher as dollar rally stalls

A street money changer counts South African Rands in Harare, Zimbabwe, file. REUTERS-Philimon Bulawayo

South Africa’s rand edged up early on Friday after plunging the day before, helped by reviving demand for commodities and investors looking to take profits from a recent dollar rally.

At 0715 GMT the rand was up 0.26% at 18.4110 per dollar from last night’s dip to a one-week low of 18.7570, triggered by wavering hopes for a quick global recovery from the pandemic.

The World Health Organization said this week the coronavirus, which causes the COVID-19 disease, could become endemic like HIV and may be here to stay.

That was compounded by signs of a second wave of infections in countries like South Korea and Germany that seemed to have had infections under control.

But early trade saw some flows back into the rand, in line with other commodity sensitive currencies, as a flare-up of trade tensions between China and the United States spurred a flight to bullion.

Spot gold was up around 0.4%. It earlier touched its highest since late April.

U.S. President Donald Trump said on Thursday he was disappointed with China’s failure to contain the coronavirus and suggested he could cut ties.

“The tight range (on the rand/dollar) throughout the week has meant that momentum is non-existent and a fresh catalyst is sought for a breakout of the range one way or another,” said economists at ETM Analytics in a note.

“That will likely come from the USD given the focus on trade relations with China and the data today.”

Bonds were gained as well, with the yield on the benchmark 2030 government issue down 0.5 basis points to 9.595%.

In equities, the Johannesburg Stock Exchange’s (JSE) All-Share index opened 1.09% higher at 49,646 points, tracking global equities higher.

South African drinks maker Distell said on Friday its full-year profits could drop by up to 80% because of the impact of the coronavirus, and a ban on alcohol sales in its home market since March.

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