Rand firms slightly in early trade

South Africa’s rand firmed slightly early on Monday, clinging to the previous week’s gains spurred by hopes for the conclusion a stimulus package in the United States.

At 0700 GMT the rand was 0.03% firmer at R16.49 per dollar compared to a close of R16.49 on Friday in New York.

The expectations of stimulus in the world’s largest economy have provided a welcome boost for the rand by weakening the dollar and boosting appetite for risk-sensitive currencies.

Traders, however, warned that the cheer was thinning. On Friday, President Donald Trump offered a $1.8 trillion coronavirus relief package in talks with House Speaker Nancy Pelosi – moving closer to Pelosi’s $2.2 trillion proposal.

Locally, anticipation ahead of Thursday’s address in parliament by President Cyril Ramaphosa, in which he promised to outline the government’s economic recovery plan, has also kept trading on the cautious side.

“The rand, over the course of the previous week, posted incremental gains, despite various conflicting comments from President Trump with regard to a fiscal stimulus package,” said analysts at Nedbank in a note.

“As the US is on holiday today, the markets are likely to be cautious and illiquid going into the local close.”

Bonds were flat, with the yield on the benchmark 2030 paper up 0.5 basis points to 9.50%.