The South African rand firmed in early trade on Wednesday as investors who are optimistic that U.S. lawmakers could reach agreement on a pre-election coronavirus relief package sought out riskier currencies.
At 0610 GMT, the rand ZAR=D3 traded at 16.4575 versus the dollar, 0.14% firmer than its previous close.
“Some renewed optimism made its way to markets, as U.S. lawmakers continued to negotiate the relief package, with emerging markets gaining on the hopes,” Bianca Botes, executive director at Peregrine Treasury Solutions, said in a note.
“The rand managed to win some ground, making its way to R16.42/$, however R16.40 remains a resilient technical level.”
U.S. President Donald Trump has raised hopes for a stimulus breakthrough, saying he was willing to accept a large aid bill, despite opposition from his own Republican Party. no top-tier data due locally this week, the rand has continued to be driven by global risk sentiment.
South Africa’s currency and bonds offer some of the highest returns among emerging markets, and have remained attractive despite a frail economy and mounting fiscal risks.