South Africa’s rand climbed more than 1.2% to a 3-1/2 week high against the dollar on Wednesday, riding on an upswing in risk appetite after a raft of weak data dampened expectations for U.S. rate hikes.
The rand touched 11.7190/dollar, its strongest since April 6 according to Thomson Reuters data, and was trading at 11.7455 by 1522 GMT, a 1.04% gain over Tuesday’s New York close at 11.8685.
It was one of the strongest performers in a basket of 25 emerging market currencies tracked by Reuters.
The rand’s gains had been driven in large part by a rally in euro/dollar after release of weaker-than-expected U.S. first quarter GDP data, 4Cast analyst Anisha Arora said.
This had led to speculation of a dovish tone from the Federal Reserve later in the day, prompting investors to unwind long dollar positions.
“Pressure from the domestic backdrop has taken a back seat for the time being,” Arora added, referring to a halt in power blackouts by struggling state utility Eskom which have weighed on investor sentiment towards South Africa in recent weeks.
Government bonds also nudged higher, and the yield on paper maturing in 2026 eased half a basis point to 7.93%.