The rand climbed to a six-week best on Tuesday as demand for risk assets was lifted by renewed hopes for a Covid-19 vaccine and solid industrial and retail data from China.
At 1500 GMT the rand was 1.44% firmer at R16.43 per dollar, its best level since July 27, having closed overnight at R16.67.
“This seems to be a purely technical washout below the 200 day MA support level,” said a trader at IG Warren Venketas.
The rand has struggled for weeks to break the 200 daily moving average (DMA) around R16.56 in volatile but range bound trade driven mostly by external events, although further signs of a ailing local economy spooked skittish investors.
“Chinese industrial output data initiated the initial risk appetite but technicals sourced further rand strength,” the trader added.
China’s industrial output accelerated and retail sales grew for the first time this year, beating analysts’ forecasts, signalling a recovery in the world’s no.1 economy.
Vaccine hopes have also crept back into markets.
On Tuesday South African health officials said AstraZeneca had resumed Covid-19 vaccine trials in the country, more than a week after tests were paused due to serious side effects in a participant in Britain.
Bonds were firmer, with the yield on the 2030 issue down 5 basis points to 9.23%
In the equities market, stocks gave back the previous session’s gains as investors focused on negative company results and earnings forecasts.
The Johannesburg All-Share index was down 0.35% to 56,130 points and the Top 40 index fell 0.35% to 51,795 points.
TFG closed 4.80% weaker after the fashion retailer said it expects its half-year profit to fall by 20% as sales declined due to store closures during Covid-19 lockdown restrictions.
The weak earnings forecast and sales numbers even as restrictions eased also pushed its rivals Woolworths Holdings and Truworths down 2.50% and 3.29%, respectively.
Leading the decliners was PPC down 13.51% after the cement maker said it will do a capital raise and sell assets as part of restructuring agreements with it South African lenders.