Rand gains as Biden transition lifts global risk appetite

The rand gained early on Tuesday after US President Donald Trump accepted the start of a transition to a Biden administration, boosting global risk appetite.

The rand is seen by some investors as a proxy for emerging market risk and tends to gain strongly when global market sentiment is upbeat.

Trump gave the go-ahead to proceed with a transition to a government led by President-elect Joe Biden, despite plans to continue with legal challenges.

At 0700 GMT, the rand traded at R15.36 versus the dollar, 0.4% stronger than its previous close.

On Monday the rand had shrugged off the impact of credit rating downgrades that the finance minister called painful.

Anchor Capital said in a research note that the global backdrop was favourable for the rand, but that any further recovery would likely be gradual and slower.

“We are neutrally positioned on the US dollar at the moment, and we will probably look to increase our exposure to the greenback should the rand move into the high-R14s against the dollar,” it said.

Government bonds were little changed, with the yield on the 2030 instrument up 0.5 basis points to 8.905%.