Rand hits best level in a month as emerging markets rally on softer dollar

The pound clawed back some gains against the dollar after earlier weakening on the resignation of UK Brexit minister David Davis. The pound was marginally supported on indications that Prime Minister Theresa May’s government was now firmly tilting toward a “soft” Brexit.

However, the pound’s gains were tempered by indications that the Brexit process remained fraught with risks, with much now depending on a more accommodating approach by the EU in negotiations towards the end of the year.

At 3.01pm the rand was at R13.3416 to the dollar from R13.4648 after having reached R13.308 in intraday trade. It was at R15.7167 to the euro from R15.811, and R17.8084 to the pound from R17.9518.

The euro was at $1.1781 from $1.1742.

Local bonds tracked the firmer rand. After hitting 9% earlier in 2018, the benchmark R186 government was last bid at 8.58% from 8.645%, and the R207 at 7.305% from 7.37%.

Foreigners were net buyers of local bonds to the value of R504.9m over the past week, helping to nudge yields lower. Foreigners hold about 40% of South African bonds, due to their high yield and relative stability.

The US 10-year treasury was last seen at 2.8506% from 2.8214%.