The rand rallied by nearly 2% on Tuesday reflecting a weakened dollar as well as easing anxiety over squabbling in the ruling African National Congress (ANC) party.
At 1500 GMT the rand was 1.92% firmer at R16.61 per dollar, having slipped to a low of R16.94 overnight in volatile trade that saw the unit divert away from broad gains by emerging market currencies.
Infighting within the ruling ANC intensified heading into the weekend, but in a press briefing late on Monday President Cyril Ramaphosa stamped his authority, saying party officials must take leave from their positions if charged with corruption and resign if convicted.
His response also eased speculation of cabinet moves that had riled sentiment toward the rand.
“Good news indeed, but we have all been in this game far too long to take a politician’s word for anything,” said Standard Bank’s Warrick Butler in a note.
Some analysts have forecast a rand recovery heading into end-year, despite signs of deep recession due to Covid-19, citing the high yield offered by the currency.
“We have held the view for some time,” economists at ETM Analytics said. “With loose liquidity conditions across the globe and a fundamentally fragile USD seen helping the ZAR unwind some of its undervaluation”.
The Johannesburg Stock Exchange (JSE) reversed the losses it suffered on Monday to end the day in green as positive manufacturing data from China and Russia and growth in the local Absa PMI number in August boosted hopes of a quicker global economic recovery from the coronavirus.
The FTSE/JSE all share index was up almost one percent to end the trading day at 56,025 points while the FTSE/JSE top 40 companies index was up 0.93% at the day’s close to 51,704 points.
Bonds also rallied, with the yield on the benchmark 2030 government bond down 15 basis points to 9.135%.