South African rand strengthens as dollar struggles, stocks rise

youpdate rand, add stocks

JOHANNESBURG, February 1 (Reuters)The South African rand strengthened on Tuesday, holding onto gains made in the previous session after the dollar fell as investors consolidated the greenback’s recent gains.

At 3:50 p.m. GMT, the rand ZAR=D3 was trading at 15.3200 against the dollar, 0.49% stronger than its previous close.

The rand is rallying after last week’s losses as bets on U.S. interest rate hikes rose on a hawkish shift by the Federal Reserve at a time when forecasts by the Reserve Bank South- were considered less hawkish than market expectations.

On Tuesday, the dollar fell for a second straight session, with the greenback index trading at 96.397, down 0.29% against a basket of currencies. The weaker dollar came as Fed policymakers allayed investor fears of a very rapid tightening of monetary policy, while an impending hike in US interest rates in March is already priced in.

But investors attributed the dollar’s loss mainly to a near-unprecedented rally until Jan. 28, when the currency hit a 19-month high.

“We think last week’s rally was a bit too extended and the rubber band must have pulled back a bit,” said André Cilliers, currency strategist at TreasuryONE, in an morning note.

But strength in emerging market currencies, including the rand, will not extend too far as investors keep a close eye on the US nonfarm payrolls figure to be released on Friday, he said. he declares.

Stocks on the local stock exchange continued to rise for a second straight session, starting the second month of the year on a strong note after January’s volatility.

A series of promising trade statements from some South African companies and improving near-term prospects for the local economy kept the market momentum going.

The benchmark all-equity index .JALSH rose 0.79% to 74,889 points and the premier index of the top 40 companies .JTOPI ended up 0.82% at 68,375 points.

South African government bonds also firmed, with the benchmark 2030 maturity yield ZAR2030= down 5 basis points to 9.285%.

(Reporting by Olivia Kumwenda-Mtambo and Promit Mukherjee; Editing by Subhranshu Sahu and Angus MacSwan)

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