Rand revels in investment pledges as it shrugs off global developments

The rand maintained a positive tone in midmorning trade on Wednesday, a day after getting a shot in the arm from China, which has pledged at least $14.7bn in new investments.

Separately, struggling power utility Eskom received $2.5bn in funding from the Chinese state bank, in a deal that will help relieve pressure on the state-owned enterprise, long considered a key risk to the fiscus.

“If SA could now only clear up the uncertainty created out of the land reform process, the rand might find itself trading at substantially stronger levels than is the case at present,” TreasuryOne director and head of currency dealing Wichard Cilliers said.

For the moment, markets appeared to revel in the positive local news, made at the start of the 10th Brics summit in Johannesburg. The pledges will also be welcome news for President Cyril Ramaphosa, who is on a drive to ensure $100bn in new investments over a five-year period.

The global environment, which invariably tends to have a much big influence on the rand, was relatively stable ahead of the release of the US second-quarter GDP on Friday.

The upbeat US figures could boost chances of higher interest rates, boosting the dollar in the process.

In apparent expectations of a strong data, the yield on the benchmark US 10-year paper has recently flirted again with the symbolic 3% mark, the level that previously shook emerging-market currencies and bonds.

At 11.09am, the rand was 0.54% firmer to the dollar at R13.2141 from R13.2855, at R15.4548 to the euro from R15.5221, and at R17.3871 to the pound from R17.4618.

The yield on the benchmark R186 10-year note was 8.65% from 8.72%, while the R207 was at 7.395% from 7.440%.