Rand inches higher as bulls reappear

South Africa‘s rand edged higher on Tuesday, recovering from a slide the session before as traders bet on a favourable environment for emerging markets.

At 0730 GMT, the rand was up 0.2% at 14.01 per dollar, after falling as much as 1.5$ overnight to 14.08 as investors took profits from a recent rally.

The rand breached 14.00 last week, reaching a six-week best of 13.87, as weak economic data from the United States spurred buying of riskier assets.

“After a relatively good performance last week, there was a lot of relief already priced in and just three weeks ahead of the elections there will always be some event risk that would need to be accounted for,” private bank Investec said in a note.

“Add to that a modest correction in global risk appetite and the USD-ZAR has encountered some support.”

South Africa holds national elections on May 8. Business-friendly President Cyril Ramaphosa’s ruling African National Congress is expected to keep its majority, albeit by a slimmer margin than the 62% it won in 2016, potentially weakening his push for economic reforms.

Bonds also gained before National Treasury’s auction of R3.3 billion ($235 million) of long-term debt. The yield on the benchmark 10-year bond was 1 basis point lower at 8.46% in early trade.

In stocks, the Johannesburg Stock Exchange’s (JSE) Top-40 Index opened 0.7% higher at 52 325 points, tracking Asian equities higher.