South Africa’s rand extended its rally on Tuesday from the previous session, firming to well below the 15 rand mark against the dollar following the appointment of the widely respected Pravin Gordhan as finance minister.
By 1100 GMT, the rand had gained 1.44% to 14.8800 per dollar, a level last seen before Nhlanhla Nene was unexpectedly fired as finance minister last Wednesday.
The rand also benefited from selling of the greenback as local traders sought to unwind long-dollar positions ahead of a meeting of the US Federal Reserve, where its policy committee (FOMC) is expected on Wednesday to raise interest rates.
“The local markets definitely don’t want to run the massive risks over the holiday and the FOMC, so we’re seeing large profit-taking from long-dollar positions today,” said the chief trader at Bidvest Bank currency desk, Ion de Vleeschauwer.
South African markets will be closed on Wednesday for a public holiday.
The dollar slipped to a seven-week low against a basket of currencies on Tuesday amid growing jitters over the message the Fed will seek to send on interest rates on Wednesday, buoying most emerging market currencies.
South African government-issued bonds also rallied on Tuesday, with yields across the curve falling. By 1100 GMT the yield on the benchmark 2026 issue had shed 33 basis points to 9.5%.