The rand held near its best level against the dollar in 15 months on Tuesday morning, supported by bond inflows, while the JSE could struggle to find a clear path amid the mixed picture in the Asian markets.
The rand was steady against the dollar at R14.19/$, pulling back a tad from last week’s R14.14/$, its best level since January 2020.
SA’s interest rates have attracted foreign capital, boosting the rand, which is the best-performing emerging market currency. Foreign investors bought a net R1.2bn worth of SA bonds over the past week, the most since early February, according to JSE data.
“Base effects are at play for currencies and emerging market assets which saw sharp disinvestment a year ago on differentiated risk perceptions, and so substantial weakening of their currencies are now seeing differentiated strength. But the rand is still an outperformer,” said Annabel Bishop, chief economist at Investec in a note.
The stronger rand has correlated with a dip in US treasury yields. The yield on the US treasury note hovered at 1.61%, easing from the 14-month peak of 1.77% touched in late March. In contrast, the yield on the R2030 SA government bond stands at an attractive 9.07%.
In share markets, Japan’s Nikkei 225 index was down 2%, but Hong’s Hang Seng’s rose 0.22%.
The JSE continues to fare well despite bouts of volatility, which are inherent in stock markets. The small-to-medium cap stocks in particular, which do not necessarily move all indices, have picked up dramatically in recent weeks.