The rand steadied against the dollar early on Wednesday, holding near a five-week high hit in the previous session as rising hopes of a $1.9 trillion stimulus programme in the United States elevated risk demand.
At 0700 GMT, the rand traded at R14.73 against the US dollar, compared to a previous close of R14.74 – its strongest level since January 5.
“Over the course of the week thus far, the USD has traded broadly on the back foot, with both the majors and emerging markets benefiting from this scenario. The rand has now reached the short-term technical objective around the R14.70 level,” analysts at Nedbank said in a note.
US President Joe Biden’s $1.9 trillion coronavirus relief bill is expected to pass through Congress with little changes despite opposition from Republicans over the aid’s price tag.
Analysts see the fiscal spending, coupled with continued ultra-easy Federal Reserve monetary policy, dragging down the dollar in the longer term, feeding demand for risk assets.
In fixed income, the yield on the long-dated benchmark government bond due in 2030 was up 2 basis points to 8.610%.