South Africa’s rand extended its gains early on Thursday to a new 27-month best, still supported by global risk demand as investors raised bets the US central bank would lend at low rates for longer.

At 11am, the rand was 0.29% firmer at R13.72, having earlier touched R13.67, its strongest level since February 2019. The rand is the best performing currency against the dollar to date in 2021, advancing nearly 7%.

A host of US Federal Reserve officials this week echoed the sentiments of chair Jerome Powell that a spike in inflation would be transient and ultra-easy policy continued to be warranted.

Lower US interest rates boost the appeal of riskier but high-yielding assets such as the rand.

“The rand has continued appreciating over the course of the week. Having breached beyond the R13.80 technical support level, its next short-term objective is around the R13.60 level,” said analysts at Nedbank in a note.

“The latest moves are not attributable to local factors but to comments from the Fed yesterday.”  — Reported by Mfuneko Toyana, (c) 2021 Reuters