Rand firms as trade optimism lifts emerging markets

South Africa’s firmed on Friday as demand for emerging market currencies lifted on reports that China and the United States had made more progress in their trade talks.

At 1505 GMT the rand was 0.86% firmer at 14.41 per dollar.

Chinese Vice Premier Liu He spoke by telephone with US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer, with the two sides making further substantive progress on trade talks, Xinhua news agency said on Friday.

Bonds also gained, with the yield on the benchmark paper due in 2026 down 9 basis points to 8.67%.

Analysts expect the rand to remain volatile as it reacts to global factors and concerns over the domestic economy.

South Africa’s struggling state power firm Eskom resumed power cuts on Thursday and said on Friday the blackouts would continue until Sunday. It warned that further cuts were likely next week, underscoring the risks to businesses in Africa’s most industrialised economy.

The rand fell on Thursday after data showing that output in two key industrial sectors of mining and manufacturing remained weak.

“These are currently not good odds for the rand,” Commerzbank analysts said in a note. “Above all, the uncertainty about the (Moody’s) rating review on 29 March is likely to lead to increased nervousness on the markets and thus to stronger fluctuations in ZAR exchange rates.”

On the bourse, the Top-40 index closed 0.4% higher at 49 684 points while the broader all-share rose 0.45% to 56 040 points.

Multichoice topped the gainers’ list on the Top-40 index, jumping nearly 5% after fund manager Allan Gray up stake in the pay-TV company to 5.5%.