South African rand edges up as relief rally slows

South African bank notes featuring images of former South African President Nelson Mandela (R) are displayed next to the American dollar notes in this photo illustration in Johannesburg, file. southafricnews/Siphiwe Sibeko

JOHANNESBURG (southafricnews) – South Africa’s rand extended a relief rally on Thursday as global risk demand was revived by signs the coronavirus’ economic impact could be limited.

At 0700 GMT the rand was 0.08% firmer at 14.7500 per dollar, a fourth consecutive start on the front foot following a torrid January that saw the currency shed nearly 8% on its way to a two-month low.

Although drugmakers and the World Health Organization played down press reports about progress toward finding treatments for the newly identified virus, the relief of the last few sessions continued.

“Yesterday’s price action was very erratic with vacuum liquidity at times, as news of a possible vaccine treatment for the virus made the headlines. Riskier currencies all rallied hard with commodities also bouncing,” said senior trader at Standard Bank Oliver Alwar.

Risk demand was also helped by a surprise decision by China to halve tariffs on some U.S. imports.

Locally, the newsflow and data calendar was quiet, with most traders building up positions ahead of President Cyril Ramaphosa’s ‘state of the nation’ next week, the budget speech on Feb. 26 and Moody’s credit review shortly after that.

The South African Chamber of Commerce and Industry (SACCI) releases its January business confidence index at 0930 GMT.

Bonds were firmer, with the yield on the benchmark 2026 paper down 2 basis points to 7.905%.

Reporting by Mfuneko Toyana; Editing by Alex Richardson

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