Rand powers to new five-month high

South Africa’s rand rose to a new five-month high on Friday as investors globally looked to take on risk, targetting emerging markets for their higher yields.

At 1515 GMT, the rand was 0.69% firmer at 14.04 per dollar, pulling back slightly after breaching 14.00 for the first time since July earlier in the session.

The rand has gained about 5% since mid December, despite a raft of data releases showing a weak economy and nationwide blackouts by state power firm Eskom, with investors willing to overlook the negatives and pocket the high yield.

A global backdrop of low-to-zero central bank rates in developed markets, paired with the spectre of recession as the United States and China continue to tussle over tariffs, has prompted investors to hunt for yield.

Analysts see a further pick up in risk appetite in early 2020, especially with the US central bank set to keep lending rates flat or lower them further.

In local data, South Africa’s trade surplus widened to R6.1 billion in November from R2.75 billion surplus in October.

Bonds were firmer, with the yield on the benchmark government paper due in 2026 down 6 basis points to 8.165%.

Stocks ended higher, with the JSE Top-40 Index up 0.24% at 51,147 points, while the All-Share Index rose 0.41% to 57,480 points.